NEW LAW FIRM: HEW AND BORDENAVE A LIMITED LIABILITY LAW PARTNERSHIP LLP

ALOHA! THANK YOU FOR VISITING THIS SITE. HOWEVER, I HAVE CHANGED LAW FIRMS. I AM NOW WITH HEW AND BORDENAVE A LIMITED LIABILITY LAW PARTNERSHIP LLP, WHICH PROVIDES TRANSACTIONAL AND COMMERCIAL LITIGATION SERVICES. HOWEVER, THE MAILING ADDRESS (1575 S. BERETANIA ST. STE. 206 HONOLULU, HAWAII 96826) AND PHONE NUMBER (808-944-8400) REMAIN THE SAME. FEEL FREE TO ALSO CONTACT ME AT RYAN@HEWBORDENAVE.COM. MAHALO! RYAN K. HEW, ESQ.

"Taxes are the price we pay for a civilized society."

*I posted this to my Facebook yesterday for the Federal income tax return deadline, and forgot to put it to my blawg! To busy dealing with my taxes and clients' transactional issues during this hectic tax period.  Anyway, a little less relevant today, but remember 2015 Hawaii income tax returns or requests for extension are due tomorrow (4/20/16), so still slightly relevant. Cheers and good luck to you! 

I hope your Monday, this final day for submitting your U.S. federal income tax returns (at least without an extension), is not that stressful, but I share this interesting quote with you by one of my favorite U.S. Supreme Court Justices from the past, Oliver Wendell Holmes, Jr. He was a great jurist and in his time was known as the "Great Dissenter". I selected this quote, as apparently this quote appears on the IRS building in Washington D.C. So with that, I wish good luck on your taxes, as I do empathize with all of you, especially fellow self-employed small business owners! Anyway, if you are interested, you can find a nice short biographical history for Justice Holmes here: http://www.pbs.org/wnet/supremecourt/capitalism/robes_holmes.html

I hope your Monday, this final day for submitting your U.S. federal income tax returns (at least without an extension), is not that stressful, but I share this interesting quote with you by one of my favorite U.S. Supreme Court Justices from the past, Oliver Wendell Holmes, Jr. He was a great jurist and in his time was known as the "Great Dissenter". I selected this quote, as apparently this quote appears on the IRS building in Washington D.C. So with that, I wish good luck on your taxes, as I do empathize with all of you, especially fellow self-employed small business owners! Anyway, if you are interested, you can find a nice short biographical history for Justice Holmes here: http://www.pbs.org/wnet/supremecourt/capitalism/robes_holmes.html

Happy Holidays and Happy New Year: Office Announcements for End of the Year 2015

Aloha and Mele Kalikimaka!

The office shall be closed from today, December 24, 2015, until January 5, 2016. If you are a current client, worry not, your matters are being worked at throughout the holidays, but feel free to email me. For new clients or matters/projects, please also send me an email and it will be taken up in the New Year. If it is an urgent matter, please contact the Hawaii Lawyer Referral Service (http://hawaiilawyerreferral.com/).

At this time, I'd also like to share some words of gratitude. I am so appreciative of the great things accomplished this year, including moving to a larger office, finding a co-counsel to support business disputes and litigation matters, receiving a pro bono award, and becoming an adjunct professor at HPU. I look forward to the New Year and its blessings, as well as challenges as I feel they help me grow.

Things to look out for from me and my practice in 2016 includes: restarting blogging, law and professional talks to be hosted at my office for small groups, and my year as President of the Hawaii Young Lawyers Division. Additionally, I hope to finally deliver on setting up some helpful online videos, making a significant structural change to deliver new and improved services, and continuing to support those communities here that have supported me throughout these many years.

Mahalo and have a Happy Holidays, and safe and prosperous New Year!

RKH

Did you Preorder an iPhone 6? Did you Review your Wireless Agreement? (Don't worry, I know the answer.)

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

So were you one of the lucky ones this morning?  Were you able to pre-order yourself an iPhone 6 or an iPhone 6+?  I was successful in getting an iPhone 6, a gold one with 128 GB if you are interested.  However, I was also able to get a copy of my Wireless Customer Agreement with AT&T, which I find interesting.  Usually, when I make large purchases online I like to copy and paste the agreements in a MS Word document so that I can analyze them and truth be told consider utilizing their language in my agreements.  Attorneys are always looking for drafting language, copying and pasting speeds up the process for clients, but also for the attorney, it allows us to see how other agreements try encompass a transaction and reduce it to writing (at least for a business attorney).  Further, when we are developing a new transaction for a client it helps to see what is out there already in the marketplace. Basically, do we have something novel or is someone else already doing it that way.  

Anyway, this post is not about analyzing attorneys, but rather I thought it would be interesting to see how a giant wireless company drafts its agreement and what you are agreeing to, as I find for smaller businesses they are always curious what the "big boys" do for their agreements. Also as I stated, transactional attorneys will use drafting language from another company's agreement if their client is doing the same or similar, then modify to the client's needs (not to mention in B2C agreement, if the customer already understands a competitor's agreement it makes it easier for them to understand if the language is the same).  My last rationale is that in our TL;DR social media culture, I thought I would highlight some provisions I thought were interesting if you were just curious as a fellow user of wireless services.

So here is the pdf version of the Wireless Customer Agreement that popped up on my screen that AT&T made me agree to to get my iPhone 6 on preorder, so you can follow along.

I. 2nd Paragraph = Please Read - Are we Tracking You? and You are Agreeing to Arbitration.

Right off the bat, in the second paragraph, in big, bold letters, AT&T's agreement states:

PLEASE READ THIS AGREEMENT CAREFULLY TO ENSURE THAT YOU UNDERSTAND EACH PROVISION, INCLUDING OUR USE OF YOUR LOCATION INFORMATION (SEE SECTION 3.6). THIS AGREEMENT REQUIRES THE USE OF ARBITRATION ON AN INDIVIDUAL BASIS TO RESOLVE DISPUTES, RATHER THAN JURY TRIALS OR CLASS ACTIONS, AND ALSO LIMITS THE REMEDIES AVAILABLE TO YOU IN THE EVENT OF A DISPUTE.

A. Privacy Issue

So what's all of that mean? Well, if we go down to Section 3.6, we soon discover that this all about how they handle information that they receive from your "Device" (your phone). One of the relevant parts states the following:

We use that information, as well as other usage and performance information also obtained from our network and your Device, to provide you with wireless voice and data services, and to maintain and improve our network and the quality of your wireless experience. We may also use location information to create aggregate data from which your personally identifiable information has been removed or obscured. Such aggregate data may be used for a variety of purposes such as scientific and marketing research and services such as vehicle traffic volume monitoring. It is your responsibility to notify users on your account that we may collect and use location information from Devices.

Interestingly, the language here tracks with many privacy policies that other companies use and they've incorporated it into the agreement.  Additionally, AT&T recommends you see its privacy policy on its website by stating:

Please review the terms and conditions and the associated privacy policy for each Location- Based Service to learn how the location information will be used and protected. For more information on Location-Based Services, please visit att.com/privacy. 

I've discussed the differences between a contract and a policy in a Slideshare presentation before if you are curious.  In this case, some of the policies are firmly settled into and a part of the agreement; this is always a decision to ponder when drafting of whether or not to incorporate policies into an agreement, thereby making them a part of the contract.

B. Arbitration

So here is one fun part (well, at least to me), throughout this agreement AT&T strives to make it clear through all capitalization or bolding of letters that you are agreeing to binding arbitration. "What's 'arbitration,' Precious?!?" (Pardon, the dorky humor.)

Well, actually AT&T tells you what it is exactly in Section 2.1 of the agreement.  Arbitration is NOT court, it is a form of "alternative dispute resolution".  It is less formal than a court proceeding and tends to be faster in reaching a resolution in a dispute than going to court. With that being said, generally speaking, many feel that arbitration tends to be favorable to the business and anti-consumer.  I'm not here to judge whether or not that is true, but what is clear is that AT&T has its consumer's waive the ability to go to court (other than small claims) and has also barred class arbitration and class actions.  "Class" actions or arbitrations are where a large number of people who have suffered that same injury from the same person (a business entity is a legal person) band together to pursue a claim.  This type of provision is also seen as anti-consumer by consumer adovcates.  For my part and this post, I'm just going to address the question: can they do that?

Yes, the Supreme Court of the United States (SCOTUS) has made clear in recent rulings the applicability of the Federal Arbitration Act to these types of agreements. So if you have a dispute with AT&T beyond small claims court limitations, you are going to have to arbitrate: there is not another option. 

It is worth noting here AT&T had a case before SCOTUS on this matter in AT&T Mobility v. Concepcion, 563 U.S. 321 (2011).  Basically, SCOTUS ruled that the FAA preempted state laws (in this case California's law) that prohibit contracts from disallowing class-wide arbitration, thus allowing businesses to include arbitration agreements eliminating a consumer's ability to bring a class action suit. So it should come as no surprise with a SCOTUS victory, they are going to include this in their agreements. 

II. Section 6.0: Data - Why all the CAPITALIZATION and Bolding?!

So another area that caught my eye, and probably purposefully so by the drafter of this document is Section 6.0.  Why did it catch my eye?  When scrolling down the text one cannot, but help notice the large amounts of bolding and capitalization in Section 6.0.  And of course they are going to do that, it has to deal with one of the biggest contentious areas that people generally have with their wireless carriers, the data usage plan. 

A. 6.1: Overage Charges; No Rollover; and Terminate with or without Cause 

So this isn't exactly news, as many of you already understand this, but I thought I would pull out the line in the agreement that states it for you:

On Data Services with a monthly megabyte (MB) or gigabyte (GB) data allowance, once you exceed your monthly data allowance you will be automatically charged for overage as specified in the applicable rate plan. All data allowances, including overages, must be used in the billing period in which the allowance is provided. Unused data allowances will not roll over to subsequent billing periods.

You will be charged for overages if you are on a rate plan where that is possible, so those of you grandfathered in will probably cling to your rate plans that have no overage charges till you become a grandfather.  In addition, no rolling over unused data into another billing period. 

Then we have this sentence at the end of Section 6.1:

AT&T RESERVES THE RIGHT TO TERMINATE YOUR DATA SERVICES WITH OR WITHOUT CAUSE, INCLUDING WITHOUT LIMITATION, UPON EXPIRATION OR TERMINATION OF YOUR WIRELESS CUSTOMER AGREEMENT.

Basically, AT&T may terminate your data services and they do not need a reason to once your wireless customer agreement ends whether it expires or terminates. 

B. Section 6.2: Don't Do this Stuff as It's Not the Point of the Wireless Data Service (i.e. Prohibited Uses)

Ok, I am not quoting Section 6.2 (as the relevant part I want to discuss is long), and you are probably getting tired reading this post as it is really long, but for those of you have stuck it through all this, much appreciated.  

Anyway, for this wall of bolded text, basically it is AT&T's intent to prohibit certain behaviors as those uses are probably illegal, harms AT&T's infrastructure, damages AT&T's ability to profit, or exposes them to some sort of other liability.  It's actually pretty detailed and lists a lot examples. Also they save themselves on making sure you understand that the list of examples are not the only ones of Prohibited Use by stating that their listing is "without limitation".  Of course, if AT&T "believes" you are using their Service in one of these prohibited manners, it may terminate the agreement. 

III. Section 10.0: Doing Business in Multiple Jurisdictions. 

So I am going to round out this post at the end of AT&T's Wireless Customer Agreement (seems to be a good place as any to stop), as I tend to do this blog for business owners (small and large), and Section 10 to me highlights what businesses face when they operate in multiple jurisdictions.

Most businesses start off in one state, and then as they become more successful they grow and that growth is sometimes beyond the state they started in.  Depending on the situation, sometimes you can avail yourself of your home state's laws and other times when you do business in another state you are bound to follow their laws.  For large businesses, like AT&T they have a myriad of laws that they must follow at the federal level, but individually as to all the states that they have customers in.  Sometimes those state laws force a company to stipulate to things in their agreements, in particular when it is with consumers, due to some states passing consumer protection laws.  Here, in AT&T's Section 10.0 we see that California, Connecticut, and Puerto Rico (which is not a state, but I've been using "state" here for my own convenience) have special provisions. 

Therefore, this brings me to a point for all you businesses that have operations in multiple states. While for the sake of ease, and that variations in your operations and systems cost time and money, it is sometimes inescapable due to a state's laws that your agreements will be regulated.  So you should consider, especially when it comes to your consumer agreements, knowing what the consumer protection laws are if you intend to a comprehensive catchall agreement like AT&T has done here. 

Anyway, I think this makes up for my lack of posts for several months.  I will strive to be less wall-of-text on you readers next time and spruce up the next post with pictures, possibly my own doodles for a Draw that Law when I get back to it.  As always, mahalo for reading.

-RKH 

Clarifying Point: "Nonprofit" does Not Mean "501(c)(3)"

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Happy Holidays and Happy New Year all!   As it is the giving time, I actually took time to give a donation through Friends of Hawaii Charities, Inc. page, as I was going through the process this triggered my busy-filled brain that I was going to do a series of one-sheets and posts about non-profits, tax-exemption status, and the meaning of 501(c)(3) . . . which as you can see I have not done.

So I figured let's just do a short post on one aspect:  namely, terminology and use of phrases of "nonprofit", "nonprofit corporation" and "501(c)(3)".

Be Specific: The Importance of Right Word

Many times, we use language in a way that does not comport to "legalese".  It is true is easier and sometimes the "officialness" of the word tends to confuse rather than help. However, for attorneys, especially transactional ones, like myself, we often correct clients that conflate a "corporation" with a "LLC".  They are NOT the same entity.  Further, this translates into a shareholder owns stocks/shares in a corporation whereas a member owns membership/ownership interest in their LLC.  While, this can get confusing to the average businessperson, we attorneys use it to understand what type of situation we are facing for the purposes of ownership, rights, obligations, taxes, etc . . . 

So this brings me to the point of this post.  I hear many times people use the word "nonprofit" to mean the same thing as "501(c)(3)" and vice versa.  While, a 501(c)(3) is a type of nonprofit, not all nonprofits are 501(c)(3) organizations.  (If you remember nothing else of this post, just remember that sentence!)

What is a Nonprofit?

Many people think that "nonprofit" means that the organization does not make money. While, in a sense true, that does not paint the whole picture.  Like many laypeople's interpretation of the mechanics of law that is oversimplified.  The designation of being a nonprofit does NOT mean that the organization does not intend to make a profit.  What really means is that the organization has no owners (like shareholders or members of for-profit corporations or LLCs) and that the revenues earned by the organization do not inure to any particular owner.  In fact, there are some large revenue-generating nonprofit organizations out there, and one has had some headlines recently is the National Football League (NFL).  

Yes, the NFL is a nonprofit; specifically, under the US Tax Code it is a 501(c)(6).  I will get to the 501(c) thing in a minute.  I'd like to finish this thought on "nonprofit" before segueing to the 501(c).  You see, in the United States, because business entity formation happens at the state-level (here in Hawaii you go through the Department of Commerce and Consumer Affairs, and in other states through the secretary of state), a nonprofits first step toward 501(c)(3) is to become a nonprofit corporation.  

At that point, after your Articles of Incorporation are filed, you have a nonprofit corporation in your state, BUT you are NOT a 501(c) tax-exempt nonprofit organization. 

What are 501(c)s? and Specifically What is a 501(c)(3)?

After you have a nonprofit corporation most organizations try to determine whether or not to seek further 501(c) status due to their purpose.  Notice that I mentioned that the NFL is a 501(c)(6), which is a Business League,  but in total there are about 29 different types of 501(c)s of varying use.  The most well-known is what everyone thinks of as a nonprofit, which is an organization organized for charitable (or similar purposes) and has 501(c)(3) status.

If the nonprofit corporation has a charitable purpose, its board of directors, generally, tend to seek 501(c)(3) status form the IRS.  Why?  This tax-exempt status confers a benefit to the donor.  If you look at the website that I made donation to this is the language they use:

Your donation is made to Friends of Hawaii Charities and is tax-deductible because Friends of Hawaii Charities is a 501(c)(3) tax-exempt charitable organization.

For charitable organizations, that is they key feature of a 501(c)(3) tax-exempt status, allowing the donors to get a tax deduction.  I will save discussing the application process for clients, law talks, future one-sheets and posts, but suffice to say it is a long process.  Basically, to receive this special status the nonprofit corporation has to meet certain criteria, and even after it gets its 501(c)(3) status the organization then must do certain things or is barred from doing activities.  For example, 501(c)(3) organizations cannot support political candidates and conduct extensive lobbying whereas the 501(c)(4), civic leagues, and now known due to the past election cycles, as "Super PACS", are not barred from these activities (yet). 

Last Word: Know the Terms

I hope this clears the confusion when you use the words "nonprofit" and "501(c)(3)". Nonprofit is just a general catchall, and consider the fact that the term can just as easily apply to a casual association as well as a formal organization (i.e. one that has filed Articles of Incorporation to become a nonprofit corporation).  Then, you take your nonprofit corporation and apply for 501(c)(3) tax-exempt status.  If that does not help, as always seeks an attorney or professional and they may explain it better than me. In the meantime, enjoy the end of your 2013 and have a Happy New Year!

-RKH

P.S. If you are feeling giving, be sure to check out the Friends of Hawaii, Inc. site and give to a Hawaii nonprofit through Friends of Hawaii, Inc., which is a 501(c)(3) charitable organization before 2014 hits!

Shopping Carts in Hawaii! What's the Law?

 

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

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Today's Post is Not About Sledgehammer Time: It's Only Focused on the Shopping Cart Law

Hey all, I decided to jump on the bandwagon (may be the shopping cart?) and talk about shopping carts.  However, I am not going to get into whether Rep. Brower's actions exposes him to civil or criminal liabilities or if they were right or wrong.  I think Civil Beat, attorney Marcus Landsberg, and the news outlet and social media has already beaten that cart into disrepair (yeah, I am going to keep trying to hammer away with the lame jokes and puns).

Anyway, what I would like to do is take a look at this matter from a business establishment perspective (those that put out the carts) and what the legislature has put forth as a law on point (looking at what is on the books.  It turns out that we have enacted a law specifically for shopping carts.  HRS § 633-16 discusses the unauthorized removal of shopping carts.  Further, as it is in Chapter 633, it puts this matter in small claims court.  

Breaking Down the Law

So looking at the law, as currently stated, it makes it a violation for a person to remove a shopping cart (including baskets and other devices) from the premises of business establishment (that owns the cart), if they are unauthorized.  The premises include the parking lot as well as the sidewalks adjacent to the business establishment's premises.

The business establishment is the person who has the ability to bring a claim under this law if there is damage to the business or property.  The business may sue for damages and win an award equal to the replacement value of the cart (and keep in mind the average cost of a cart ranges from $100 - 250), basket, or device plus the cost of the suit.  The establishment can also sue to enjoin the unauthorized act.

So in order for a business to win in small claims court (under this law) the must nail down these elements: 

  1. they are the lawful owner of the cart, which has been identified;
  2. they gave notice, which means posting a conspicuous sign where the carts are stored that says the carts are not to be removed;
  3. that the cart was removed from the business location without proper authority; and
  4. the person accused of violating this law is in possession or had control of the cart.

Practicalities of the Law

In terms of policymaking it is understandable why the legislature gave such a legal action for business owners of these carts (as they are expensive).  However, in terms of reality is if these carts are being taken by people who are unable to pay the damages or the business cannot track them down its effectiveness as a law should be looked into.  In addition, how many shopping cart owners utilize this law for these purposes? All I know at this point though is that the bang of the gavel in your favor is a better sound than a squeaky cart on uneven pavement!

A Final Word

Although this post was focused on shopping carts, business owners for any type of legal action should always consider the cost of pursuing claims in court versus that of implementing practical solutions (where possible), or possibly a combination of legal and practical action, such as drafting contracts, policies, procedures, and other preventative measures.  Anyway, that's it for this post.  Mahalo!

BOILERPLATE BLURB: ENTIRE AGREEMENT; INTEGRATION; MERGER.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

What is the Entire Agreement (aka Integration aka Merger) Clause?

The entire agreement or integration clause basically states that anything not in or a part of the written agreement, is not a part of the agreement.  It is premised upon the parol evidence rule, which is a rule that prevents a party to a written contract from presenting outside evidence that contradicts or adds to the written terms in the agreement.  Basically, you can't say the final agreement is wrong because you had discussed something different in letters, conversations, or side agreements prior to the final agreement.

Why do we have it?

At a certain point, you either have a deal or not, and while some people prefer handshakes, their attorneys feel that having something in writing is better.  Now, imagine, if we allowed parties that were in dispute of a contract continually bring in evidence that undermined the final written agreement.  It would kind of make settling on the terms of the agreement pointless, wouldn't it?  So, we limit the understanding of the agreement to what is reduced to writing, bolstered by this clause.

Generic Example

This Agreement sets forth the entire agreement of the parties and supersedes all prior or contemporaneous writings, negotiations, and discussions with respect to the subject matter hereof.  Neither party has relied upon any such prior or contempraneous communications.

Example of a an Entire Agreement Clause in a Consultant Agreement

This Agreement represents the entire understanding between the parties with respect to the subject matter contained in it and supersedes all other written or oral agreements made by or on behalf of Consultant or Client.

Example of Integration Clause in an Employee Agreement

This agreement constitutes the entire agreement of the parties relating to the subject matter of this agreement and supersedes all other oral or written agreements or policies relating thereto, except that this agreement does not supersede or limit the Employee's rights under any benefit plan.

What about changing the terms of the Agreement?

Well, that's what the Amendment clause is for, and that is for another post!

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Social Media & the Law Update 09-18-13: Upcoming PNM Class, FB 'Like' Constitutionally Protected

LEGAL DISCLAIMER: The following information is provided to be just general information, and therefore, should not be taken as specific legal advice that pertains to any particular situation.  The reader should not base any decisions on the information here to act or refrain from acting regarding a legal problem.  If you believe you have a legal problem please seek legal advice from a licensed attorney in the relevant jurisdiction. ——————————————————

Exciting news everyone!  My Pacific New Media (PNM) class on Social Media and the Law is next week!  So there is still plenty of time to sign-up.  Here is the general info:

Sep 25, 2013 • Wed • 7:00-9:00pm • 1 mtg • UHM Krauss 012 • $50 (SMCHI $45)

What will I be covering?  Well, as it is a general survey class, I will touching upon areas where the law has inserted itself in the social media sphere, such as today's more exciting news.

4th Circuit Court of Appeals Rules the "Liking" on Facebook is Constitutionally Protected

For instance, like how a Facebook 'Like" is protected by the 1st Amendment of the U.S. Constitution (i.e. it is a freedom of speech).  Today, the 4th Circuit Court of Appeals issued a ruling in favor of a former deputy sheriff who had been fired from his job due to "liking" the Facebook page of the man running in opposition to his boss.  Basically, the court felt that by “Liking” a campaign page, it was the “Internet equivalent of displaying a political sign in one’s front yard, which the Supreme Court has held is substantive speech.”  Further, the court, in its unanimous ruling, as to this Facebook issue, stated that, “On the most basic level, clicking on the ‘like’ button literally causes to be published the statement that the User ‘likes’ something, which is itself a substantive statement[.]"

To read the complete ruling, check it out here.

Other Topics at my Class

As stated in my post on Trademark Usage, I attended the ABA's Annual Conference, so I sat in on a seminar on "Social Media Terms of Use: Case Law Round Up".  Many of the issues discussed at that seminar are ones I will be focusing on for my PNM class, such as various social media platforms' terms of use, policies, etc . . . . I have a Slideshare that covers basics on the differences between Policies and Contracts.   What many users fail to realize that Terms of Use are generally binding and enforceable contracts, but that a Privacy Policy tends to be just a company's call toward a prescribed action.  This is something that social media marketers, consultants, small business owners, and those who use social media as one of their primary marketing tools should consider.  Finally, if you are a responsible decision maker for your organization/business, you really consider having internal dialogue on handling social media in general (whether it be employees, PR, marketing, etc . . .).

Anyway, that is just a sliver of one of the many topics to be covered in my class.  So if you are interested in signing up click here.

Mahalo!

-RKH

What's the Purpose of a Trademark? How is it Used?

LEGAL DISCLAIMER: The following information is provided to be just general information, and therefore, should not be taken as specific legal advice that pertains to any particular situation.  The reader should not base any decisions on the information here to act or refrain from acting regarding a legal problem.  If you believe you have a legal problem please seek legal advice from a licensed attorney in the relevant jurisdiction. ------------------------------------------------------

So it’s amazing how time flies when you have a lot of work to do.  I have been very grateful for these past couple of months for the clients that have come through my door (or via electronic means), but more work means less time for blogging and sharing information to all you interested soon-to-be or current business owners.

Anyway, as some people know I was fortunate last month to attend the American Bar Association’s Annual Conference in San Francisco.  I attended many Intellectual Property, Business Law, and a couple of Employment Law seminars.  When I can, I will update my blog or provide one-sheet resources on the information I obtained from these seminars to share with all of you.

So today’s post is about the use of trade and service marks.  A prior Draw the Law post covered the difference between a trade name and trademark and I have a one-sheet on What is Trademark?.

Purpose of Marks

Before we get to the using of a trademarks, let’s first consider that the purpose of a trademark.  The point of a trademark is to distinguish one company’s set of goods and/or services from another company’s.  Basically, it is meant to avoid confusion to consumers, so they can readily ascertain from the mark which company the goods and/or services are originating from.

So How are Marks Used in Commerce?

A mark can be used on goods (products), which would make it technically a “trademark”.  Specifically, this would mean the mark is applied, engraved, embroidered directly on the goods, POS displays, the use of labels or tags affixed to the good, or shipping labels when sending the goods through commerce.  It is not just merely advertising, but must have a Point of Sale component.

In the case of a mark used in connection with services, clearly there is no tangible part to a service.  Therefore, service marks are found on websites, brochures, advertising (but not printer’s proofs), on or at locations associated with the services, such as vehicles used with the service, or on the uniforms of employees while they perform the service.

How do I Properly Use my Trademark?

You can use ℠ for service marks, ™ for trademarks, and registered trademark symbol (the 'R' that has a circle around it) ONLY for registered marks (it is a violation of the law to use the registered symbol when your mark is NOT registered).  Further, the mark should be distinguished from regular text, through the use of quotation marks, larger print, all capital letters, or through colorization of the wording.  Also your grammar lessons are important for trademark usage.  A noun should ALWAYS follow a mark.  The mark should NEVER be used as a verb.  For example, it is a XEROX copier and NOT xeroxing. Or perfect for the web as another example, it is NOT you googled the answer, but it is rather you ran a GOOGLE search.  Finally, the correct spelling should be used and moreover, the mark should not be pluralized.

The point of all this proper usage is to avoid a loss in rights in the mark.  Many trademarks of famous brands have become generic, and generic terms are not entitled to trademark protection.  Consider that the word "escalator" used to be a registered trademark, but the Otis Elevator Company has lost that mark due to it becoming generic.  Therefore, you should be actively policing your trademark usage and avoid losing rights that you worked so hard to create with your brand.

That’s it for this time.  I hope to be back soon with more information to share.

Mahalo for stopping by!

-RKH

 

 

 

New Law in the Brief (Sort of): Act 162 and Taxes for Cash-Based Businesses

Hey everyone, long time no see . . . been very busy, but I am grateful for all the business deals that everyone has been doing.  It makes for an optimistic outlook in the economy and that there are a lot of creative people in Hawaii looking to be successful. Anyway, I am writing this post on Act 162 (SB1197 SD1 HD1) of the 2013 Hawaii Legislative Session because I am wondering did you file your General Excise/Use Tax Returns (more commonly known as GET)?  It was due on July 20th for monthly, quarterly, and semiannual (so all three categories basically).

Further, this Act even though it is so short highlights several key concepts to understanding government, law, and business.  Specifically the following aspects: (1) the concept of “sunset” provisions and how legislation is tied together over the years; (2) how laws are enforced (namely through taxes and penalties); and (3) the applicability of the law to people/businesses who don’t think the law applies (cash-based businesses and the GET in this case).

Let’s get to it!

Act 162: Relating to Tax Administration

Act 162’s measure title doesn’t really help tell you what it does. All it says is “relating to tax administration” so I can see how someone may just gloss over the title.  However, the description, which says “Deletes the sunset provisions for the special enforcement section of the department of taxation.” provides no insight either, unless you know what is the special enforcement section of the Department of Taxation.

Sunset Provisions and Repealing Them

Before, I get to the Special Enforcement Section, let’s touch upon the first concept I mentioned, the “sunset provision”.  So many times legislators are not sure about the effectiveness of a proposed law, it might be for a variety of reasons, may be the problem will go away, there is not enough money to fund the project, etc . . . so they put in a sunset provision, that is the law will repeal itself upon a certain date in the future (i.e. it will cease becoming law upon that date).  If you are a contract buff, consider it like a specified termination date in the agreement.

In Act 162, this is how the language looks like that references the sunset provision:

SECTION 1.  Act 134, Session Laws of Hawaii 2009, is amended by amending section 13 to read as follows:

"SECTION 13.  This Act shall take effect upon its approval; provided that:

(1)  The amendments made to section 235-20.5, Hawaii Revised Statutes, by this Act shall not be repealed when section 235-20.5, Hawaii Revised Statutes, is reenacted on January 1, 2011, pursuant to section 8 of Act 206, Session Laws of Hawaii 2007; and

(2)  Sections 231-F, 231-J, 231-K, 231-L, 231-M, 231-N, 231-O, and 231-P, Hawaii Revised Statutes, in section 2 of this Act shall take effect on July 1, 2009[; and

(3)  This Act shall be repealed on June 30, 2014, and section 235-20.5, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of section 8 of Act 206, Session Laws of Hawaii 2007; provided further that sections 231-1, 237-9, and 237-12(b), Hawaii Revised Statutes, shall be reenacted in the form in which they read on the day prior to the effective date of this Act]."

Notice the lined-through section?  That is the sunset provision from the original law that was passed, Act 134 from session 2009, which now Act 162 (2013) is amending.   So by strike-through, the goal of Act 162 is to delete that sunset provision from the Act 134 (2009) law.  Since no new date was put in, rather they deleted the whole section, this would mean that now Act 134 (2009) is permanent.

Click here to see the bill in its entirety.  Notice, that Act 162 DELETES the sunset provision.

Special Enforcement Section and Tying it Together

However, deleting the sunset provision of the previously enacted bill has no meaning to you unless you know what that bill did.  So notice that in Act 162 (2013) it tells you exactly that piece of information.  Specifically, that “Act 134, Session Laws of Hawaii 2009, is amended”, so if you look up Act 134 (2009) you would discover that the purpose of that act earlier was to:

The purpose of this Act is to provide the department of taxation with the necessary resources and tools to target high-risk, cash-based transactions to shore up confidence in Hawaii's tax system for those that do comply.  Importantly, the legislature intends that the enforcement resources provided focus on the civil collection and enforcement nature of Hawaii's tax laws.  In an effort to demonstrate the targets of this undertaking, this Act defines "cash-based business" for enforcement purposes, and the department of taxation is directed to focus on such businesses.  At the same time, education is equally important as enforcement.  Therefore, this Act requires the department of taxation to reach out to industry groups, specific demographics in the economy, and practitioners to educate taxpayers on their tax responsibilities.

While this is only describes the purpose, an in-depth look at the provisions of the bill would show that the Special Enforcement Section was created in the Department of Taxation and that its powers included investigation, enforcement, etc . . . for violations of the tax code, specifically targeting “cash-based businesses”.

Now what businesses primarily deal in cash?  You would probably think those vendors who are at farmers markets, craft and fairs, and swap meets.  You would be right because the since the creation of the Special Enforcement Section they have investigated numerous cash-based vendors and found that when asked for their tax license, they had none.  You can see some of the specifics from the Section’s reports by clicking the following for: (1)  July 1, 2009 through June 30, 2010 and (2) July 1, 2011 through June 30, 2012.

What you should take away from all of this is that if you are a cash-based business, you should realize that the deletion of the sunset provision effects you because the Special Enforcement Section of the Department of Taxation has been made permanent.  So it will continue to investigate and enforce penalties against you, if you are in violation of the law. Primarily focusing on the fact that if you do not have a tax license to conduct business you will pay a penalty.

What's the Penalty for Not Having a Tax License?

Act 134 (2009) amended Hawaii Revised Statute 237-9 by inserting the following language:

Any person who receives gross income or gross proceeds of sales or value of products from engaging in business in the State and who fails to obtain a license or receives gross income or gross proceeds of sales or value of products from engaging in business in the State without a license required under this section may be fined not more than $500; provided that a cash-based business may be fined not less than $500 and not more than $2,000, as determined by the director or the director's designee.  The penalty under this subsection shall be in addition to any other penalty provided under law and may be waived or canceled upon a showing of good cause.

So as a cash-based business can you afford penalties like these? 

But the Law Doesn’t Apply to Me! I only do this Occasionally . . . every Saturday, Sunday and Every Other Wednesday

I know, I can hear it right now, as I have with many clients, "X law does not apply to my Y situation" . . . well, to be honest your focus is perhaps cooking delicious food for people or creating a unique piece of art, but your craft is not the practice of the law (lawyers) or the application/enforcement of the law (government agents), so how can you be absolutely sure the law does not apply to you?

What you should realize that the words and definitions for the tax code are broad, so long as you are “engaged in business” you are subject to the tax.  HRS 237-2 defines:

"Business" as used in this chapter, includes all activities (personal, professional, or corporate), engaged in or caused to be engaged in with the object of gain or economic benefit either direct or indirect, but does not include casual sales.

I know you see it, it says “does not include casual sales” and you feel that you only show up on Saturdays to do your sales, well we look again at HRS 237-1 and find that “causal sales” means an “occasional or isolated sale or transaction” involving:

     (1)  Tangible personal property by a person who is not required to be licensed under this chapter, or

(2)  Tangible personal property which is not ordinarily sold in the business of a person who is regularly engaged in business.

Yeah, it is hard to imagine the Department of Taxation’s Special Enforcement Section buying into “occasional or isolated” when you show up for your slotted vendor stall on a regular section, and you are selling the same goods that you did the week before.  However, everyone’s facts and situation is different and it might be something worth looking into, but the point of this post is to generate some thought for you the reader the following:

  1. sunset provisions are temporary, but by deleting them it makes the law permanent;
  2. that a new law in one year you feel might not apply to you may actually have huge ramifications for your business because it is tied to a prior one that has continuously effected you; and
  3. your business is your business, but the applicability of the law is for enforcers and practitioners, however they can help you make better risk management decisions based on these laws. 

At the end of the day consider seeking professional (law, tax, and accounting) help to make determinations for your cash-based business.   As you’d rather be paying taxes on time rather than paying penalties and taxes for trying to avoid a law that you did not think applied to you because you were just taking cash or viewed yourself as “casual”.  It might be the time to register your LLC or corporation, update your accounting practices, or make better financial decisions in light of your taxes.

Mahalo for staying through this lengthy post!

P.S.

Need instructions on filing your returns? Click on this link to be taken to the State of Hawaii’s Department of Taxation’s General Instructions.

Considering getting a LLC or Corporation because your cash-based business needs it?  Review my downloadable one-sheet.  If you are a more visual person take a look at this infographic.

LEGAL DISCLAIMER: The information provided here is meant to be general information, and should not be taken as specific legal advice that pertains to any particular situation.  The reader should not base any decisions on the information here to act or refrain from acting regarding a legal problem.  If you believe you have a legal problem please seek legal advice from a licensed attorney in the relevant jurisdiction.

Draw the Law: Government and Business, Part III: The Legislature

Personal Update

Aloha everyone!

I apologize to all my loyal blawg readers, that have missed on so many months on posts from me.  I have been extremely busy, but have a lot new and exciting information, as well as simple little sketches to help you understand the law.  First off, let me state that my law firm will now be offering notary public services here in the State of Hawaii.  Therefore, if you need something notarized and are in the Kaka’ako area please contact my office to schedule an appointment.

Second, the reason I was not posting for the past several months is I was working for the Hawaii State Legislature for the House Judiciary Committee.  This was fascinating and informative work on the drafting of legislation, and I do recommend any young attorney get some legislative experience if they intend to work in government or even in private practice; it is an invaluable experience, and goes a long way if you intend to do lobbying or public interest work.  With that work finished, Draw the Law should be returning to semi-regular postings, as I will be holding regular office hours at my Ward Avenue location.  Of course with my legislative knowledge, I will be using it for today’s post to follow-up where we left off, and of course I will be talking about the Legislature and how it affects your business.

Lastly, you can expect New Law in the Brief posts, a series of posts of the legislative process, as I have interacted with many local business owners and advocates who have no idea how the Legislature operates, but are interested, and finally there will be new content updates, such as events, one-sheets, slides, etc . . .

Anyway, I’ve written enough on me, let’s get back to Draw the Law!

Draw the Law: Government and Business, Part III: The Legislature

The 3 branches of the federal and local state government balance and check each other.  Specifically, when it comes to lawmaking, the legislature creates the law, while the executive enforces, and the judicial shall interpret the laws application to a case.

So last time I discussed how the judicial branch of the government (both US and Hawaii) interacts with businesses when they sue each other or receive a suit against them by a customer or possibly an agency of the government charged with enforcing the law.  This brings me to the Legislature, as it is the place where the laws are made.  It is what gives a consumer the right to sue you for a defective product, it’s what gives the police and government agencies to chase you down for speeding tickets or having to go to the liquor commission for a license to dispense alcohol.

So why should a business owner care about what the legislature, state or federal or both do?

Let me generalize for a bit, so that you can understand what is happening.  Typically, what happens is that a new industry or business practice is implemented, sometimes with little problems to society, but other times causing problems for people.  In the case when it is not, the company is likely injuring a number of people, but sometimes that injury does not give those people a cause of action (aka a right to sue) the company doing the damage.  Therefore, people become advocates for a change in the law making a company responsible for the harm.  They do so by interacting with their elected official, which may either be a senator or representative and they introduce a bill into the legislative process.  Other times, the change in or the addition of a new law need not come from the advocacy of protecting consumers and clients, but many industries see benefit in engaging the government by either having access to information, resources, or possibly legitimacy.

So here, we have a widget plant in a neighborhood. The community does not like the smoke, and asks their elected official to speak to the legislative body and convince them to pass Bill 55 on the issue.  The legislature then passes Act 10, which orders any widget plant to put a red cap on their smoke stack.

Many times laws do not just benefit one company, but an entire industry. Therefore, the companies that mak up the industry will bandwagon together and form some type of organization to lobby for changes in the law on behalf of the greater whole.  A good example of this is the Hawaii Chamber of Commerce.

So the widget plants do not like putting a red cap on their smoke stack. Red paint is too costly, and they would rather put blue caps, which are more pleasing to the eye. So the widget companies band together to form the Widget Association of America, which hires a lobbyist to make their case heard in the legislature to change the law.

While, some business owners live in a legislative district separate from where their business is located, this should not prevent them from knowing who the representatives are for the area.  The reason being is that the local neighborhood business provides a valuable resource to the community, and in turn that community elects the representative.  Therefore, consider finding out who your representative of both where you live and do business in, and consider joining or forming some type of association to get more involved with the legislative process if you feel that their may be benefits to your business in influencing the lawmaking process, as the laws your legislator passes may affect your business. If you are in the State of Hawaii, you can find out who your elected officials are by using this website and entering your address in the top-right corner search box.

Next time I will touch upon the executive branch, the part of the government charged with enforcing the laws.

LEGAL DISCLAIMER: The information provided here is meant to be general information, and should not be taken as specific legal advice that pertains to any particular situation.  The reader should not base any decisions on the information here to act or refrain from acting regarding a legal problem.  If you believe you have a legal problem please seek legal advice from a licensed attorney in the relevant jurisdiction.

Boilerplate Blurb: Assignment.

Assignment Clauses

Generally, in contract law land contracts are freely assignable (meaning they can be transferred).  However, if an agreement possess a restrictive or anti-assignment clause it will prevent this transferring of the agreement.

Thus (anti)-assignment clauses determines whether rights, obligations and duties under an agreement may be transferred in whole in or part to another, and under what conditions. Under U.S. law, contractual rights are freely assignable or delegable, unless prescribed or limited by agreement.

The clause frequently overlaps with “successors and assign” or “parties in interest” clauses that controls whether successors or assignees can assume the rights and obligations under the contract.  Some of the frequently asked questions you should ask yourself about the deal you are doing in regards to the opposite party are the following:

  • Do you want the the ability to delegate tasks in the agreement?
  • Do you want the ability to assign something of value stemming from the contract, such as revenue?
  • Do you want the ability to assign all rights under the agreement to another company that may acquire your business? (remember assignability makes it easier to transfer, thus giving you more options, meaning more value)
  • Do you want to give the other party the ability to assign the agreement? Do you want them to always be responsible to you, even if the agreement is assigned (do you want them to remain on the "hook")?
  • Do you want the party to specifically do the work or can they use sub-contractors?

Some examples:

Here is a simple assignment clause that makes it so that Person X, must get the written consent from Party A to assign the rights or obligations of the agreement.  It may show up in an independent contractor agreement where Person X is providing services to Company A:

This agreement or any of the rights or obligations thereunder shall not be assigned in whole or in part by Person X without the prior written consent of the Company A.

Here is an example of a clause that restricts the licensee (person receiving the license) to that one license, and they will not be do transfer it to anyone else without the permission of the licensor.  This is typically a clause used in intellectual property or grants of the right to use something, so consider software, logos, grants of access to things, etc . . . . It is in this way a licensor can make "more" single-holder licenses by restricting transfer, and forcing those that want the item in question by entering licensing agreements.

The right of Licensee to hold and use the property of Licensor pursuant to this Agreement is restricted solely to Licensee and shall not be assigned, transferred, sublicensed, encumbered, or subject to any security interest without the written authorization of Licensor. Any attempted assignment will be void and of no effect.

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*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Pacific New Media Class: Social Media and the Law - March 6, 2013

Please join me at my class with Pacific New Media on Social Media and the Law next week Wednesday, March 6, from 7 - 9pm if you are interested in learning about the applicability of various laws with social media usage. I will be talking about whether you can be fired for using social media, legislative updates, and other various issues that have cropped up when the law tries to get a handle with the likes of Facebook, Twitter, and other communicative platforms.

Click on this link for more details.

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Social Media and the Law: Legislative and NLRB Updates

The following information was presented by me to the Social Media Club of Hawaii's Social Media "Boot Camp" for Hawaii Recruiting, Staffing and Hawaii Human Resources Professionals on Friday, February 22, 2013.  You can find a downloadable pdf version on the "Resources" page of my website. Here was what was discussed: Legislative Updates

Summary: Generally, speaking states are moving to prohibit employers from asking for usernames, passwords, and access to an employee’s or potential employee’s personal social networking account.  The argument goes that they need access to the personal accounts as a way to protect proprietary information, trade secrets, to comply with federal or trade association regulations, or to prevent an employer of being exposed to legal liability (due diligence).  The countervailing argument is that the personal account has nothing to do with one’s application to a job or doing the job, and is an invasion of privacy.  Thus far, it seems privacy advocates are carrying the day as four states last year, Illinois, Maryland, Michigan, and the latest California have adopted laws that prevent employers from accessing personal social media accounts of employees or potential employees. Hawaii’s 2013 legislative session has two bills fashioned after California’s.

Federal: Representative Eliot Engel of New York has recently introduced H.R. 537, the ‘Social Networking Online Protection Act’ (SNOPA).  The bill if enacted would prohibit employers from requiring/requesting that the employee or applicant provide the employer their user name, password, or other means for accessing the employee/applicant’s private email account on any social networking website; OR discharge, discipline, discriminate in employment or promotion, or take adverse action against them for refusing/declining to provide a user name, password, or access OR if the employee/applicant files a complaint under the Act (basically asserting their right to sue to protect themselves).  Finally, it gives the US Secretary of Labor to assess a civil penalty of up to $10,000 for violations and stopping the violating actions. Further, US district courts can give relief to the affected person through employment, reinstatement, promotion, and the payment of lost wages and benefits.

State: During this 2013 Hawaii Legislative session, two bills, HB713 and SB207, work for the most part, very similar to the Federal law, and the language is based mostly on California’s recently adopted law.  I will focus on HB713 as I have worked with this bill in particular.  The current incarnation of HB713, is an HD2 that was passed out of the House Judiciary Committee, yesterday (2/21) and basically uses broad language to prohibit an employer from asking an employee or potential employee their user name, password, or trying to get access to their personal social networking account.  Currently, the HD2 would have the Hawaii Civil Rights Commission investigate a claim, and would operate similarly to any other investigation that the Commission already does for other issues under its authority. Prior variations had DLIR handle the investigation.

Bottom line:  This issue is not going away, and it is clear that as time goes on it is more likely than not employers will be denied access to personal social media accounts.  However, this still does not prevent workplace investigations and other necessary steps when there may be a violation, and the social media account is involved. For example, situations where there is workers’ compensation fraud or the wrongful transmission of trade secrets.  The best situation for employers is still likely that workers use their personal devices and personal time to do their personal social networking, and not on company time, company devices, and company email accounts. As always check with attorney or HR specialist on policies and procedures.

 

NLRB Rulings

Summary:  The National Labor Relations Board (NLRB) continues to apply the National Labor Relations Act (NLRA) to situations where the employer has taken adverse actions against employees due to postings on social media sites.  Further, it has frowned on overly broad social media policies by companies trying to regulate employees’ social media behaviors. However, a recent DC Court ruling has stated that President Obama’s recess appointments to the NLRB were invalid. However, this should not be taken as a sign that employers can ignore the recent rulings on social media policies and firings.

In Hispanics United Buffalo, the NLRB held that the termination of five employees due to their Facebook posts, where the company claimed harassment by the five on another employee, violated the NLRA. The posts and comments were deemed as a discussion of job performance, and dealt with the preparation of co-workers to defend against allegations of poor work.  The comments were prompted when one threatened to complain to the boss that others were not working hard enough, which in turn prompted these comments: “My fellow co-workers, how do you feel?” “Try doing my job. I have five programs,” “What the hell, we don’t have a life as is,” as well as other expletive-laden responses. The NLRB ruled this was “concerted activity” for “mutual aid.”

However, in The Arizona Star Daily situation, a reporter that had posted Twitter comments stating that “What?!?!?! No overnight homicide. ... You’re slacking, Tucson.” Another began, “You stay homicidal, Tucson.” was not protected as those comments were offensive, and not concerted activity, nor about working conditions.  Similarly, an Illinois bartender fired for posting on his Facebook that he was unhappy about not receiving a raise in five years and calling customers “rednecks” and that he hoped they chocked on glass as they drove home also did not meet protective-worthy status.

NLRB on Social Media Policies: Wal-Mart’s social media policy, after working with the NLRB, received praise, where it prohibits “inappropriate postings that may include discriminatory remarks, harassment and threats of violence or similar inappropriate or unlawful conduct.”  Contrast that with the finding that General Motor’s policy was unlawful for instructing that, “offensive, demeaning, abusive or inappropriate remarks are as out of place online as they are offline.”  The NLRB felt it proscribed a broad spectrum of communications that would included protected criticisms of the employer’s labor policies or treatment of employees. Similarly, Costco struck out on an overly broad blanket prohibition against employees’ posting things that “damage the company” or “any person’s reputation.”

While, it is hard to draw any clear distinctions, it does seem clear that employers should adopt social media policies that are specific rather than impose across-the-board prohibitions; the NLRB seems to take into account chilling effects on speech in concert by workers through social media platforms, especially where working conditions are touched upon. However, a worker’s general gripes and disparaging comments about customers or groups of people will less likely be protected under the NLRA.

 

Overall Reminders:  Recent court cases have indicated that a series of emails can be taken together as a contract.  Therefore, when engaging in employment activities, such as using LinkedIn, recruiters or HR persons should be careful not to make a written offer.

Also social networking is becoming a part of people’s everyday Internet interaction. By now it is clear that information is permanent when published on the web, as many people  can screen capture, take a picture with their mobile device, etc . . . so companies should take great care when using social media as delivery system for information.

While this is a concern for marketing and PR, HR should remember it has the responsibility of dealing with the pieces of terminating, disciplining, and investigating the marketer or executive who creates the firestorm on social media.  Therefore, all decision-makers in a company need to understand social media policy.

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LEGAL DISCLAIMER: The information provided here is meant to be general information, and should not be taken as specific legal advice that pertains to any particular situation.  The reader should not base any decisions on the information here to act or refrain from acting regarding a legal problem.  If you believe you have a legal problem please seek legal advice from a licensed attorney in the relevant jurisdiction.

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Boilerplate Blurb: Severability.

Well, it's been a while for a Boilerplate Blurb, but here is one that cuts to the chase (pun intended). The severability (aka savings) clause is used to keep a contract and its various provisions intact if parts of it are deemed illegal or unenforceable in a court.  Why? With written agreements being so long today, and business deals operating as ongoing transactions it is clear that sometimes something once was legal when first drafted may become illegal or unenforceable as time goes on.  However, is that one reason to throw out the whole contract?  Probably not.  Therefore, a severability clause will be used to save parts of the agreement even if other provisions are rendered inoperable, and they read something like this:

If any provision of this Agreement is declared invalid by a court of proper jurisdiction, the provision is affected only to the extent of the invalidity, so that the remainder of that provision and all remaining provisions of this Agreement will continue in full force and effect.

However, sometimes some parts of a contract are so essential the purpose of the contract that if they are voided the severability clause states that the whole contract should be voided.  Finally, it should be noted in many legal jurisdictions, such a clause shall not be applied if it fundamentally alters the contract.

Since it is legislative season here in Hawaii, you should also know that when drafting legislation we attorneys like to use a severability clauses to save laws should the be deemed unconstitutional. This represents another facet of the interplay between the judicial and legislative branches.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Draw the Law: Government and Business, Part II: The Judiciary

Hello readers, mahalo for stopping by and checking out this second of a series of Draw the Laws on government and its interaction with business.  For this week’s post, and the next two, I fill do a brief survey of the three branches of the US government (as well as the State of Hawaii).  So I am going to start off with one that attorneys are quite familiar with, the judiciary.  Fellow attorneys, this is meant for laypeople and is a bare bones run-through, don’t tell me what I missed because I am trying to keep this brief (pun intended).

Purpose of the Judiciary

The judiciary, if you remember your civics class, is comprised of a series of courts that are meant to apply the laws of the government. It is a formal mechanism for dispute resolution.  While there may be some quibbling over this, the reality is courts and judges do NOT make laws.  They can strike down laws made by legislative bodies that are unconstitutional, this is known as “judicial review.”

The Federal System: US District Courts

The federal court system is broken into different regions, and the starting point for a plaintiff is district court.  If a party does not like the verdict they can always appeal to the appellate courts, which are in turn checked by the US Supreme Court, which rulings affect the entire country.

A lawsuit begins in the judicial system when a plaintiff files a suit.  If this is a federal lawsuit this suit begins its journey in a trial court known as US district court.  Without getting things complicated and preventing you from getting too bored with this post, know that there are several US districts broken apart by region. Further, know that you cannot just file a federal suit and any court can hear it.  The Congress must grant the court the jurisdiction (power) to hear the subject matter of the dispute.  For example, US district courts can hear matters when it is a civil action between citizens of different states.

Why does this matter?  If you are a business here in Hawaii and you get into a contract lawsuit with a California business, the California business may pursue a suit in federal court, which may be more costly than a state lawsuit if it was between two local businesses.

This is why we transactional attorneys put in jurisdiction and choice of forum clauses to prevent a lawsuit in another state and applying the laws of that state when engaging business with someone from another state.

The Federal System: Appeals Courts

The Appeals Courts is where you turn to next if you don’t like the ruling of the District Court.  Just note that Hawaii is located in the 9th Circuit Court of Appeals.

So for a party that loses, and wishes to appeal, that party will find their lawsuit at this level of the judicial branch.  Due to the fact that the US Supreme Court only hears fewer than a 100 cases a year, the United States Courts of Appeals tend to be the final stop for cases appealed.  Further, the process of appealing is expensive and less open in terms of the scope of the lawsuit.  District courts gather evidence and judges or juries make a decision based on the evidence presented.  However, with appeals courts that is NOT the case.  Appeals courts only review the decisions of the US district courts to see if there was an error in law. They do not take in new evidence, such as hearing witnesses, from the parties, and only the parties’ attorneys are allowed to speak to the court.  Therefore, this mechanism as you can see makes it difficult appealing a lower court’s ruling.

In district court the two sides present evidence to the judge or jury through evidence, testimony of witnesses, etc . . . however, once a verdict goes up on appeal the judges at the appellate level can only review what was presented at the lower court and cannot take in new information.

As a business what you need to understand is that if you lose a lawsuit at the lower level, you and your attorney need to weigh the risks and costs of appealing such a loss, and seeing if it is worth it to get an appeal.  Sometimes it is used a negotiation strategy to bring a party that is exhausted from a suit back to settlement talks.

The Federal System: The US Supreme Court

The Supreme Court of the United States (aka SCOTUS) is the highest court in the United States.  It has the ability to hear all federal court cases and over state court cases involving issues over federal law.  It should be known to anyone seeking to get their case to this level is that it is a long and costly road, as you would have had to gone through district court, appeals court, and lost at those rounds, and then ask SCOTUS to hear the case.  The chances of you bringing up a controversy that meets the hearing criteria of the 9 Supreme Court justices is rare as I stated above.  Lastly, there are only certain lawyers and firms that handle Supreme Court cases.

However, the influence of the Supreme Court can be felt throughout the land. The (in)famous decision of Citizens United vs. Federal Election Commission basically held that the First Amendment prohibited the government from restricting independent political expenditures by corporate entities.  Rightly or wrongly, depending your take on this, your business entity, association, or union may spend its money on independent communications, such as television whereby you can endorse or call to vote against specific candidates.

The State of Hawaii Judiciary

Basically, the State of Hawaii’s court system is broken up similarly to the federal system. We have circuit courts that handle different islands of the state, with the First Circuit handling Oahu. After the circuits, we have an Intermediate Court of Appeals (ICA). Finally, the Hawaii Supreme Court functions much like SCOTUS, but at the state level.  For the most part, these courts will handle Hawaii cases and controversies.  Therefore, if your employee sues your company for violating Hawaii worker laws it will be in a state court, and if you lose you may appeal to the ICA, and if the case warrants it the Supreme Court may hear it.

Why does this Matter to Your Business?

So in this example business A had a judgment against it for injuring its customers, and now that the damages are awarded that would invariably effect business B's decision to buy A. Even if the lawsuit is over, does that mean that Business A's practices will lead to another suit? Can it pay off the judgement? All things to consider when entering a lawsuit in the court system is things become public.

While this post is brief in terms of its coverage of the scope of the judicial branch, the main thing I want you to get out of it is that if you are a business consider a) if you go through a lawsuit all of that information becomes public, you are exposing your business information becoming public record; b) because of this is a deal to buyout a company, attorneys go through a “Due Diligence” phase where we basically dig up everything, including court records, that may affect the valuation of the business, including court documents; and c) if you have a business that requires its employees drive on behalf of the organization you may want to obtain a traffic abstract or traffic court report, as it is a part of your duty to make sure an employee is fit for driving for your company.

The courts exist to resolve disputes, and many times your business will engage with customers, clients, other businesses, and the like that the results may not end the way you expected and sometimes that will draw you into the judicial system.

*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Draw the Law: Government and Business, Part I: The Overview

Happy New Year! Pardon the delay, but I have had a lot of work and been trying to deliver new interesting content and helpful services for local small businesses and startups here in Hawaii. So I hope you all are off to a roaring start with your business plan, startup, second round of financing, or expanding your business to new markets.  However, if you were like me you were concerned with the “fiscal cliff” debate that raged with the US Congress at the beginning of the year.  Now in the upcoming weeks, here in Hawaii, as in Washington DC, lobbyists and stakeholders are preparing for a new legislative session to influence lawmakers.  Many of these lobbyists represent consumer advocacy, environmental protection, trade, and business groups.

So this brings me to a new series for Draw the Law, government and business.  I have a background in government, law, business and politics and I find that many small business owners do not appreciate the interaction of government. I realize that many business owners have not had civics in a while, nor did their class cover the nuances of government, regulation, and lawmaking, but that is why I think these posts should bring some clarity. So let's get to it.

The Federal System

So let’s start with a refresher, our government is a federal system. This means there is a national government, located in Washington DC, and fifty state governments, one of which is the State of Hawaii, with its state capitol being located in Honolulu.  What this means is usually you have to worry about two sets of laws.  For example, your income taxes, you have federal income tax, and a state income tax.  Another area is labor law; federal law prohibits gender discrimination, as does Hawaii state law.  However, each of the states, in some areas, are allowed exceed federal law, such as how Hawaii law prohibits discrimination against domestic violence victims or gender expression.  Finally, there are some areas that federal law only exists, such as the registration of copyright or patents.

Imagine that there are 2 sets of systems, that there is a federal government in black, and 50 state governments in red. When you start a business you start it in a state and are subject to state taxes, as well as federal taxes.

The Three Branches

So we have two levels of government, but within these layers there are three parts of each government.  There is the Executive branch, which has the United States President if it is the federal government and the Governor of Hawaii if it is the state.  The Executive branch is responsible for carrying out laws. For example, the US Department of Agriculture Food Safety and Inspection Service is the public health agency responsible for ensuring the safety of meat, poultry, and egg products is safe. At the state level the Department of Commerce of Consumer of Affairs of Hawaii is under the governor and is responsible for registering your corporation or limited liability company with the state.

The Judiciary is made up of the courts, which have judges that rule on cases. We have federal courts and state courts, and there are specific rules and procedures that allow a court to have jurisdiction over your case (i.e. they have power to hear your problem).  So for a business, if their product or service injures a customer and the customer goes out, finds an attorney, and then sues the business they will get this resolved in a court.  Another example is if you were an independent contractor and did work for a client for $3,000.00, but never received payment, you could consider suing the client in Small Claims Court.

Finally, there is the Legislative branch, which in my personal opinion most people find confusing, unless they are a politico.  This is the case because of the politics played among all the personalities of senators and representatives. For the United States Congress there is the House of Representatives and the Senate, similarly Hawaii has a bicameral (2 chambers) legislature.  The sole goal of the legislative branch is to make laws.  Therefore, many businesses, by trade or industry, bandwagon together to lobby for the creation of laws that are favorable, such as the US Chamber of Commerce, the National Restaurant Association, as do other groups, such as unions, like the ILWU or HGEA, as they interact at the two levels of government.

The executive branch (blue) is responsible for enforcement, such as through the department of taxation (taxes). The legislature (red) creates laws and lawmakers are subject to lobbyists, voters, and stakeholders influencing them. Finally, the judiciary (green) decides on cases through laws made by the legislature, such as class actin law suits.

Upcoming Weeks

In future weeks, I will go over how public policy affects management of businesses, lobbying, where nonprofits fit in, and how legislation is driven by stakeholders, as well as other topics that business owners interested in government may be interested in.

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*Disclaimer:  This post discusses general legal issues, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained herein without seeking the advice of counsel in the relevant jurisdiction.  Ryan K. Hew, Attorney At Law, LLLC expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.