One unintended consequence of California's voiding of many non-compete agreements is that it puts California employers at a disadvantage with respect to employee recruitment.  Employers in other states are free to hire away employees in California while California employers may be subject to enforceable non-compete agreements when they attempt to hire employees in other states.  Now, the California legislature intends to double down on this asymmetrical treatment by threatening members of the California bar with possible suspension or disbarment if they enter into with an employee or ..read more

Mongol Nation is an unincorporated association whose members include the official, or "full-patch," members of the gang.  The U.S. government has been prosecuting the gang since at least 2008 and has obtained convictions of more than 70 individual members under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961 et seq. and various other criminal statutes.  Then, the government indicted Mongol Nation (the unincorporated association) on charges of substantive RICO and RICO conspiracy violations.   Mongol Nation was convicted following a jury ..read more

Section 709 of the California Corporations Code provides a mechanism for "any shareholder" or "any person who claims to have been denied the right to vote" to obtain a determination by the Superior Court of the validity of any election or appointment of any director of any domestic corporation, or of any foreign corporation if the election was held or the appointment was made in California.  The statute does not directly authorize the Superior Court to determine the validity of a vote to remove a director. In Lake Lindero Homeowners Association, Inc. v. Barrone, 2023 WL 2259359 (certified ..read more

Last December, I wrote about  AB 83 (Lee & Kalra), which would enact the "Get Foreign Money Out of California Elections Act".    The California Political Reform Act already forbids a foreign government or foreign principal from making any contribution, expenditure, or independent expenditure in connection with the qualification or support of, or opposition to, a state or local ballot measure or an election for a state or local office.   Cal. Gov't Code § 85320.  This bill would, among other things, extend this prohibition to foreign-influenced business en ..read more

The closure of Silicon Valley Bank has understandably attracted a lot of attention.  There are, however, other ways to lose money when banking.  The California Department of Financial Protection & Innovation recently issued the consumer alert, which I have copied below: The California Department of Financial Protection and Innovation (DFPI) has received information that the website CALFCB.COM claims to be associated with the bank “First Credit Bank”. This is a practice commonly called “spoofing” where an imposter creates a fake website claiming to be a legitimate entity. In fact ..read more

Earlier this week, Senator Melissa Hurtado amended her placeholding bill, SB 738, to flesh out her proposed Corporate Transparency Act.  As amended, the bill would require foreign corporations that register to transact intrastate business with the Secretary of State to disclose specified information with respect to their "beneficial owners".   Because the bill defines "beneficial owner" as "a natural person who owns, directly or indirectly, 50 percent or more of the equity interest of a foreign corporation", the onus of the bill is likely to fall on small and closely held busine ..read more

Silicon Valley Bank was chartered by the State of California and was subject to the supervision of the California Department of Financial Protection & Innovation.  The DFPI was not the bank's regulator.  The bank had adopted a bank holding company structure and elected financial holding company status.  Thus, the bank's holding company, SVB Financial Group, was subject to primary regulation, supervision, and examination by the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended.  The bank was subject to supervision and examination by the Federal ..read more

Last week, I wrote about an unsuccessful challenge to the activities of the Office of Elections Cybersecurity within the California Secretary of State's office: Is The California Secretary of State Monitoring What You Publish Online?  In that case, O'Handley v. Weber, 2023 WL 2443073, the Ninth Circuit Court of Appeals found that the Secretary of State did not violate federal law when it notified Twitter of tweets containing false or misleading information that potentially violated the company's content-moderation policy.   More recently, Judge Terry A. Doughty, who sits in ..read more

Tulane Law School Professor Ann M. Lipton at Tulane Law School begins her forthcoming, Inside Out (or, One State to Rule them All): New Challenges to the Internal Affairs Doctrine, by quoting Delaware Vice Chancellor J. Travis Laster: Delaware should not be determining employment law for the country and for the world. Transcript, Strategic Funding Source Holdings LLC v. Kirincic, C.A. No. 2021-0107-JTL (Del. Ch. Oct. 12, 2021), at 43. It occurs to me that some holding company structures may present a unique choice of law issue.  In some cases, the officers of the holding compa ..read more

NRS 107.028 lists a number of different categories of persons who may serve as trustee under a deed of trust.  One category is domestic or foreign entity which holds a current state business license issued by the Secretary of State pursuant to chapter 76 of NRS.  Prestige Default Services ("Prestige Corp.") was a California corporation that held a Nevada business license and converted to Prestige Default Services, LLC ("Prestige LLC").   California Corporations Code Section 1158 provides that upon a conversion taking effect, all the rights and property, wheth ..read more