Author: Scripta Ad Astra Staff

Author: Sean Gentry

The U.S. Supreme Court has agreed to hear cases regarding class action waivers in employment agreements.  In the past, the Supreme Court has upheld such waivers of class action claims, where employers have their employees sign agreements to arbitrate those claims individually if they should arise (not as part of a class) under the Federal Arbitration Act.  However, recent cases in the U.S. Circuit Courts have weighed in on whether these waivers are enforceable in light of the National Labor Relations Act, which has created a split among the courts on whether the waivers were valid under the National Labor Relations Board’s decisions in D.R. Horton, Inc. (2012) and Murphy Oil USA, Inc. (2014).  This split includes the Ninth Circuit here in California (Morris v. Ernst & Young) and the Seventh Circuit (Epic Systems Corp. v. Lewis), which both agreed with the NLRB’s decisions to invalidate the waivers under the NLRA, against the Fifth Circuit (National Labor Relations Board v. Murphy Oil USA, Inc.), which did not.  The Supreme Court’s decision on this matter will hopefully bring some certainty for employers about how effective the use of these waivers will be going forward, and whether to use arbitration clauses in their employment agreements.

Author: Sean Gentry

With the passage in California of Proposition 64 legalizing recreational use of marijuana for persons aged 21 years or older under state law (though not under federal law) and allowing for the sale of marijuana in certain circumstances, employers will want to review and potentially revisit their testing procedures and workplace policies.  Despite the new legal uses of marijuana, employers can still implement and enforce policies than ban marijuana (along with alcohol and other drugs) and intoxication from the workplace.  Employers may still take disciplinary action against employees that violate these policies, up to and including termination, even if the use of the marijuana is for medical purposes.

As for pre-employment drug screening, testing is permissible if it is administered on a fair and consistent basis for all applicants.  Employers can choose not to hire applicants that test positive, again even if the marijuana use is for medical purposes.  However, employers should not test their current employees.  Such drug screening is only permissible in select circumstances where the employer has reasonable grounds for suspicion of drug use in the workplace.  An accident is not an automatic grounds for suspicion or for such a test.  In San Francisco the criteria for such drug screening of employees is even higher.  Nonetheless, larger employers may be required to provide certain reasonable accommodations for employees seeking help for substance abuse problems and should not take adverse actions against the employee while they are seeking treatment.  If you have questions regarding this new law or workplace drug policies generally, or if you need help with designing or administering workplace policies and procedures, Ad Astra can help employers navigate these issues.

 

Author: Regina Franco

By law, spouses are subject to the general rules governing fiduciary relationships which control the actions of persons occupying confidential relations with each other. This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other. Family Code § 721. This fiduciary duty arises on the date of marriage and does not end just because divorce proceedings have begun.

Among the issues requiring resolution through divorce is property division. In order to effectuate a division of property within the parameters of the law, parties must comply with the disclosure requirements of the Family Code. Parties are required to exchange complete and accurate declarations of disclosures listing all assets and debts in which a party has an interest regardless of whether the characterization of the asset or debt is separate or community property. When making disclosures, parties must uphold their fiduciary duties owed to each other and once disclosures are exchanged, the fiduciary duty requires that the parties update and augment their disclosures to the extent there have been any material changes so that when the parties enter into an agreement regarding property division, each has full and complete knowledge of the relevant underlying facts.  Family Code § 2100.

The Court will not enter a judgment of divorce unless the disclosure requirements have been met. Completing and exchanging declarations of disclosures are not only a technical step to getting divorced, but a very serious requirement. A violation of the disclosure requirements or a breach of the fiduciary duty could result in an award of 100% of the undisclosed asset to the complying spouse or a set aside of a judgment of divorce. There is no question that full disclosure is not only best practice, but also is mandated by law.

 

By:

Katy Young

The answer to that question can determine whether you get proper representation or not. Most people have no understanding of how to choose a lawyer to represent them. Common ways to find an attorney are to ask friends or family for recommendations, use a lawyer referral service, or good old Google. Asking for a referral to an attorney can certainly help get you on the right track, but what do you do if you don’t know anyone who knows anyone? Lawyer referral services through local bar associations can be clunky to deal with, so most people search the internet. But what if the internet doesn’t know the answer?

Yes, believe it or not, sometimes the internet does not have the answer. That is especially true when you are experiencing a dispute. If you are having a business dispute, you might Google “business law” and your geographic area. If a real estate dispute, you might Google “real estate lawyer” plus your city. By the same token, many people experiencing employment disputes Google for “employment law” or “employment lawyer.” While these all seem like reasonable search terms, the problem is that Google doesn’t know the difference between a lawyer who handles disputes and a lawyer who does not. To get a more accurate result, you would have to search “business litigation” or “real estate litigator” to get to the kind of lawyer that handles disputes. The other kind of lawyer is a transactional lawyer, one who does not go into a courtroom, but Google results assume that’s what you mean when you search “business law.” Most people are not familiar with the differences between litigators and transactional attorneys. Google barely does and yields some imperfect results.

So the first step in choosing the right lawyer is determining what type of lawyer you need. Do you need a lawyer who handles disputes and goes to court (a litigator) or one who handles non-dispute work such as transactions, contract drafting, and regulatory advising (a transactional attorney)? Once you know, then you can refine your Google search. You will be able to search “business litigation attorney san Francisco” for example, and get to us. If you just search “business law San Francisco” you get a swath of results that include the kind of lawyer you don’t need. As a firm, we do not expend any resources on Google adwords because Google is so bad at this distinction. Any time we dedicated resources to search engine optimization to make it easier for clients to find us, we get inundated with phone calls from people who want us to draft a contract or advise them on regulations, which is not what we do. Ad Astra is solely dedicated to dispute work, we are ONLY litigators. We appreciate the ability to refer out that potential transactional business to our friends, thereby helping the potential client get to a lawyer that will be a better fit for them, but we stay in our lane…and we’re damn good at it, too.

Now that you know more than Google about the difference between types of lawyers, we hope you will find the right one for you. If it’s a fighter you need, give us a call. Otherwise, we’ll refer you to a friend.

By: Sarah Murphy

“SLAPP” stands for “Strategic Lawsuit Against Public Participation” and its primary function is to “prevent citizens from exercising their political rights or punishing those who have done so”.[1] The result is that SLAPP suits often pose as civil claims such as “defamation, conspiracy, malicious prosecution, nuisance, interference with contract and/or economic advantage, as a means of transforming public debate into lawsuits”.[2]

Achieving resolution in an Anti-SLAPP matter involves two factors: 1) the defendant must establish that the challenged claim arises from a protected activity outlined in CCP § 425.16, and once established, 2) the burden then shifts to the plaintiff to establish the merit of their claim by showing a probability of success.  In other words, an Anti-SLAPP motion is like a summary judgment motion, but ‘in reverse,’ as the defendants needs to defeat the plaintiff’s pleading by showing it is legally or factually meritless.

Recently, Ad Astra associate Wendy Hillger secured a $45,000 fee award for our client. The matter involved plaintiff American Cannabis Partners claiming unfair competition against Brown’s Lumber Company, a cannabis business in Trinity County, CA owned in part by Trinity County Supervisor Jeremy Brown. The plaintiff alleged that Supervisor Brown used his influence with the Board of Supervisors to block American Cannabis Partners from receiving any licenses to operate cannabis businesses in Trinity County, and that Supervisor Brown’s private business is liable for Supervisor Brown’s activities.

Ad Astra filed a demurrer followed by an Anti-SLAPP motion. Successful Anti-SLAPP motions dismiss the claims that are based on a litigant’s participation in a public process. Here, the court dismissed the plaintiff’s claim in its entirety on the basis that the plaintiff could not make a claim for unfair competition on the facts presented.

Ad Astra filed a fees motion, arguing that even though the case was dismissed on demurrer, the Anti-SLAPP motion was still pending and fully briefed, and the dismissal does not moot our entitlement to fees under the Anti-SLAPP statute. The court agreed with Ad Astra that Brown’s Lumber would have prevailed on the Anti-SLAPP motion and awarded our client with $45,000 in fees. We are thrilled with the result!

[1] Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 642 (Wollersheim)

[2] Wilcox, supra, 27 Cal.App.4th at pp.816-817

 

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Written by:

Alex Guney

Last month, an Alameda Superior Court Judge ruled that Proposition 22 was unconstitutional and unenforceable.  While app-based drivers may have won this battle, their war to be classified as employees is far from over—especially as Uber, Lyft, and other gig service providers attempt to enact legislation similar to Prop 22 across the county.

Prop 22 was a successful ballot initiative that defined app-based drivers as independent contractors, and not employees, if certain conditions were met.  The ballot initiative was in direct response to Assembly Bill 5, which codified a presumption that a worker is an employee, unless the hiring entity could prove three circumstances were present (dubbed the ABC test).  The ABC test was developed by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court and threated the gig business model, which depended on the app-based drivers being classified as independent contractors.

Prop 22 provided a new framework for determining when an app-based driver may be classified as an independent contractor. Specifically, if the company (1) does not unilaterally set specific requirements for the dates and times of day, or minimum number of hours, the driver must work; (2) does not require the driver to accept specific service requests; and (3) does not restrict the driver from working for other companies (ride-share or otherwise), then the app-based driver may be classified as an independent contractor.  Bus. & Prof. Code § 7451.

In February of this year, a group of Uber and Lyft drivers, along with the Service Employees International Union, filed a petition for writ of mandate, asking a California court to rule that Prop 22 violates the State’s Constitution. Judge Frank Roesch of the Alameda Superior Court agreed with the drivers and ruled that Prop 22 is unconstitutional and unenforceable. First, the court ruled that Prop 22 imposed an unconstitutional limitation on the Legislature’s ability to exercise its plenary power to determine which workers must be covered by the workers’ compensation system.  Second, Prop 22 applied conditions to the Legislature’s ability to amend the new law, which the court also found unconstitutional.  Because the limitation on the Legislature’s ability to exercise control over the workers’ compensation system could not be severed from the remainder of the statute, “the entirety of Proposition 22 is unenforceable.”

In practical effect, the court’s order may be a victory for app-based drivers in name only.  It is very likely that the proponents of Prop 22 will appeal that court’s order, and in turn, request that the effects of the court’s order be stayed during the pendency of the appeal.  This means that Prop 22 will remain in effect while the case makes its way through the appeals process.  But the order ruling Prop 22 unconstitutional would not have resolved the issue of how to classify app-based drivers.  Even absent Prop 22, determination of whether app-based drivers are independent contractors would revert back to the ABC test.  On the journey to be classified as employees, the ETA for app-based drivers is TBD.

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Co-authored by:

Heather Burke (Origin Group Law LLP) & Katy Young (Ad Astra Law Group LLP)

In the first few years of regulated cannabis activity in California, many (if not most) cannabis farmers did not get paid for their product on time and, in some cases, they didn’t get paid at all. Debt collection quickly became a hot topic, as unpaid farmers waded through their legal options, from selling the debt to full tilt civil litigation. In those situations, a written contract almost always helps the farmer, which means oral agreements often hurt the producer (aka the farmer) more than the buyer (aka the distributor or manufacturer). To be sure, the best defense is a good offense (just sayin’).

While we are hoping to see more on-time payments this year, here’s a quick reminder of the debt-collection issues in play for the 2020 harvest season just in case:

1. Private Debt Collectors

2. A Demand Letter

3. Alternative Dispute Resolution

4. Breach of Contract Lawsuit

5. Foreclosing on a Security Interest or Producer’s Lien

A security interest is simply collateral from one party to another for an unpaid debt. Security interests can take many forms but the main point is that the farmer (who holds the security interest) may be able to get paid out on a priority basis if the buyer goes out of business and ends up selling off its assets.  We often recommend security interests wherever the sells their entire season in a single transaction under an agreement to pay the farmer at some later date.

In addition to security interests granted in a written purchase agreement, California law thankfully offers farmers an “producer’s lien,” which is a special type of security interest that farmers keep in their product after a buyer takes possession of the product before paying. A producer’s lien is an implied security interest, meaning the parties do not need to have a written contract in place for the lien to exist: it is automatic, provided they do not waive the producer’s lien in any written agreement.

While CDFA does offer an administrative avenue for foreclosing on a producer’s lien, cannabis farmers are not yet eligible to use that option. This means that cannabis farmers can only foreclose their producer’s lien in a civil court at this time. There is no precedent (as far as we’re aware) applying the producer’s lien in the cannabis context, though the law is fairly clear, so we assume this lien will be applied in the cannabis context at some point in the future.

Additionally, the producer’s lien may be extinguished if the buyer sells the product to a third-party, as is often the case with cannabis distributors who are acting as an intermediary (aka middle-man/broker). In such a case, the farmer may want to consider filing an injunction to stop the distributor from selling the cannabis to another party.

Moving forward, we hope written security interests become more common in California’s cannabis purchase agreements, since they offer the farmer the most protection. If a distro or manufacturer is taking the farmer’s entire season in a single transaction without paying at the time of delivery, security interests are a fair request.

CLOSING

In closing, these are worst case scenarios that generally only come into play when the farmer is already under financial stress due to the lack of payment. So the processes for going after an unpaid debt are often shrouded in a cloud of negativity and are not utilized. However, these formal processes are designed to protect sellers from unscrupulous buyers, meaning these systems may suck, but they can be powerful tools to protect farmers from getting ripped off.

Use of a written contract with an attorneys’ fees clause will provide the most protection in the event of non-payment, as the attorneys’ fees clause makes it harder for the buyer to justify the cost of the fight if the case were to proceed through trial and result in a prevailing party attorneys’ fee award. If all of this information is making your head spin, reach out to an attorney knowledgeable about the California cannabis industry and breach of contract actions.

Massive gratitude to Katy M. Young of Ad Astra Law Group LLP in San Francisco, one of Sarah and my favorite civil litigators of all time, for co-authoring this blog with me. Please stay safe everyone!

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