Damages in Misappropriation of Trade Secrets Cases by Pamela Tahim

Damages in Misappropriation of Trade Secrets Cases

By Pamela Tahim


I recently second-chaired a jury trial with Tredway Lumsdaine & Doyle LLP (TLD”) partner and lead attorney Roy Jimenez, wherein the jury awarded over $13 million to our client, who was seeking damages for misappropriation of trade secrets. In the case we tried, TLD’s client was the plaintiff and a leading nationwide bankcard merchant company.  Plaintiff had retained the defendant to create a proprietary software program to assist in the management of the plaintiff’s company.  After signing a Non-Disclosure Agreement, the defendant was given access to the plaintiff’s confidential trade secrets including its business models.

A mere three months after terminating the relationship with the plaintiff, defendant was advertising the same business and confidential trade secret information obtained while working with plaintiff.  The jury agreed with plaintiff’s expert witness that the value of the damages was the unjust enrichment of the discovery costs that plaintiff incurred to discover effective marketing strategies that enabled it to reach its level of sales and profits by the year the trade secrets were misappropriated by defendant.  The discovery process of plaintiff, which occurred over many years led to the collective state of information about plaintiff’s business methods that enabled it to achieved its growth.

Many people have since asked me how did the jury come up with the $13 million verdict?  The measure of damages in our lawsuit was based upon the theory of unjust enrichment, which has been long recognized as a measure of damages in cases involving misappropriation of trade secrets in employment law and business law disputes. However, for breach of non-disclosure agreements (NDA), there has been some confusion over the appropriate causes of action and how remedies should be calculated.

A recent decision on April 22, 2014, in the 6th District Court of Appeal in Grail Semiconductor Inc. v. Mitsubishi Elec. & Elecs. USA Inc., confirmed and clarified the damages available for a breach of a non-disclosure agreement (Grail Semiconductor, Inc. v. Mitsubishi Elec. & Electronics USA, Inc., 225 Cal. App. 4th 786, (2014)). Prior to Grail, California’s leading cases on breach of NDA damages were the Ajaxo opinions of 2005 and 2010. However, both decisions left open questions regarding whether unjust enrichment is available, and further, the basis for both breach of contract and unjust enrichment damages.

The Ajaxo decisions discuss unjust enrichment in association with breach of non-disclosure agreements. In 2005, the damages upheld for breach of contract were based on the development costs, plus the licensing fees that E*Trade initially offered Ajaxo (Ajaxo Inc. v. E*Trade Grp., Inc., 135 Cal. App. 4th 21 (2005)). However, there were existing questions about how the breach of contract damages could be calcualted if there was additional economic evidence available. Further, in 2010, Ajaxo II focused exclusively at the misappropriation claim and the damages available. The Court held that for a misappropriation of trade secrets, a plaintiff is entitled to unjust enrichment in the form of the defendant’s wrongful profit obtained from infringing sales or if it could not be “proved” then a reasonable royalty for the defendant’s sales (Ajaxo Inc. v. E*Trade Fin. Corp., 187 Cal. App. 4th 1295 (2010).


In Grail, these damage remedies were clarified. The plaintiff in Grail was an innovative company that developed a memory chip known as the semiconductor chip. In 2001, plaintiff shared its design with Mitsubishi under an NDA. However, Mitsubishi breached the NDA with Grail and passed the chip design to its subsidiary Renesas. Grail went to trial on the sole pleading of breach-of-contract claim. The plaintiff’s sole pleading of breach of contract greatly affected their outcome of damages and it is apparent from Grail the importance of pleading both breach of contract and misappropriation of trade secrets when there has been a breach of NDA.

Further, Grail establishes how damages should be calculated. In terms of contract damages, the Court decided that damages should be limited to the amount that the defendant would have paid upfront to honor the NDA and license the technology. Additionally, the benefit of pleading misappropriation is the availability of unjust enrichment damages. “Remedies under the UTSA for the misappropriation of trade secrets include injunctive relief, damages, royalties, punitive damages, and attorney fees. (§§ 3426.2–3426.4) Section 3426.3 provides several measures of damages upon proof of misappropriation of trade secrets. Under subdivision (a), a complainant may recover damages for the actual loss caused by misappropriation, as well as for any unjust enrichment not taken into account in computing actual loss damages.” Ajaxo Inc. v. E*Trade Grp., Inc., 135 Cal. App. 4th 21, 61, 37 Cal. Rptr. 3d 221, 252 (2005). Further, under subdivision (b), even when a complainant cannot prove damages with certainty, a plaintiff can receive a reasonable royalty rate.

Therefore, it is important for a plaintiff to utilize all the available strategies and claims when they are subject to a breach of non-disclosure agreement. Pleading solely a breach of contract claim could greatly limit the plaintiff’s recovery and Grail defines the available causes of action and how those damages should be calculated answering unsolved questions from the previous California case law. However, it is important to be cognizant of the fact that there are attorneys’ fees recoverable for UTSA claims for the prevailing party and if all the protections are not in place to ensure confidentiality, it may be better to just plead breach of contract. In our case, we were able to obtain unjust enrichment as a remedy because we plead the cause of action for misappropriation of trade secrets. In any such similar case, it is important to use attorneys experienced in this specific area of law to make sure that you plead the right causes of action to get the maximum damage recovery.



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Employement Law: “7 Alternative Pay Practices You Should Know,” by Shannon Jenkins


by Shannon Jenkins, Esq.
Partner at Tredway, Lumsdaine & Doyle LLP


Most employers will at some time or another have to deal with an hourly (non-exempt) employee’s intermittent request to alter their work schedule to accommodate personal or professional circumstances. Below, are 7 common alternative pay practices that you should familiarize yourself with.

Compensatory Time

Scenario: You have an hourly worker who is scheduled to work 8 hours per day, 5 days per week. One day, there is a need to have that employee work 2 hours of overtime. Rather than get paid overtime, the employee requests to leave 2 hours early on a different day. Is this legal?

Response: Probably not. Under California law, both public and some private sector employees can earn compensatory time in place of overtime (see California Labor Code section 204.3). However, under current federal law, compensatory time is only available to public employees. Thus, private sector employers who allow or require compensatory time off are in violation of the law. A bill now pending before the U.S. Congress, called the “Family Friendly Workplace Act” (S. 1626), would change the federal rule and permit compensatory time for both public and private employers. Until that bill is signed into law, private sector employers that permit employees to earn compensatory time off run the risk that they may be sued under federal law for the value of overtime wages that were paid out as compensatory time.

Makeup Time

Scenario: Your hourly worker is scheduled for an 8 hour shift, but needs to leave 2 hours early to tend to personal obligations. Your worker would like to avoid having his/her vacation or PTO bank docked and so would like to “make up” the missed time. Can this be done?

Response: Probably; see Wage Order 4-2001, Section 3, “Hours and Days of Work” section (M). Employees may take time off and then make up the time later in the same workweek, or may work extra hours earlier in the workweek to make up for time that will be taken off later in the workweek. Makeup time worked will does not have to be paid at an overtime rate. However, there are rules that must be followed in order to properly designate time worked as “make up” time. Your Employee Handbook should have the following provisions:

“Makeup time requests must be submitted in writing to your supervisor, with your signature, on the form provided by <Company name>. Requests will be considered for approval based on the legitimate business needs of <Company name> at the time the request is submitted. A separate written request is required for each occasion the employee requests makeup time.

If you request time off that you will make up later in the week, you must submit your request at least <ex. 24 hours> in advance of the desired time off. If you request to work makeup time first in order to take time off later in the week, you must submit your request at least <ex. 24 hours> before working the makeup time. Your makeup time request must be approved in writing by your supervisor, before you take the requested time off or work makeup time, whichever is first.

All makeup time must be worked in the same workweek as the time taken off. <Company name>’s seven (7) day workweek is <ex. Sunday through Saturday>. Employees may not work more than eleven (11) hours in a day or forty (40) hours in a workweek as a result of making up time that was or would be lost due to a personal obligation.

If you take time off and are unable to work the scheduled makeup time for any reason, the hours missed will normally be unpaid. However, your supervisor may arrange with you another day to make up the time if possible, based on scheduling needs. If you work makeup time in advance of time you plan to take off, you must take that time off, even if you no longer need the time off for any reason.

An employee’s use of makeup time is completely voluntary. <Company name> does not             encourage, discourage, or solicit the use of makeup time.”

Meeting and Training Pay

Scenario: Your hourly worker requests time off to attend continuing education classes which are necessary to maintain the license which is required by their position. Are you required to pay for this time?

Response: It depends; see 29 CFR sections 785.27 through 785.31. An employer is responsible for compensating its hourly employees for their attendance at meetings, lectures, and training programs under the following conditions:

  • Attendance is mandatory;
  • The meeting, course, or lecture is directly related to the employee’s job;
  • The employee who is required to attend such meetings, lectures, or training programs will be notified of the necessity for such attendance by his or her supervisor;
  • Employees who do perform productive work during attendance at meetings, lectures or training programs will be compensated at their regular rate of pay.

The same employer obligation to compensate “training pay” would also be true for in-house “lunch-and-learn” meeting scenarios. Keep in mind that any hours in excess of 8 in a day or 40 in a week will need to be paid at the appropriate overtime rate, using the hourly rate in effect at the time the overtime work is being performed.

Split Shift

Scenario: Your hourly worker is called in to work from 8-11 in the morning, is required to take a 3 hour break by the employer, and then is called back to work from 2-5 in the afternoon. Should this employee be paid for any hours between 11 and 2?

Response: Yes, the employee should be paid for 2 hours as a “split shift”; see Wage Order 4-2001, Section 4, “Minimum Wages” section (C). A split shift is defined as work schedule that is interrupted by a non-paid, non-working period established by the employer that is not a rest or meal period. If an employee initiates a break in his or her work schedule for personal reasons (for example, to accommodate childcare or personal business), that interruption is not considered a split shift since the break was not established by the employer. The Department of Labor Standards and Enforcement (DLSE) has historically considered a break longer than one hour to require a split shift premium.

When an employer requires an employee to work a split shift, the employer must pay the employee a split shift premium, which is one hour’s pay at minimum wage in addition to the employee’s regular earnings paid for that shift. If an employer pays the employee more than minimum wage, the employer is only required to pay the minimum wage rate, not the employee’s regular rate, for the split shift premium. Additionally, if an employer pays the employee more than minimum wage, the excess will be credited toward the split shift premium.

Reporting Time Pay

Scenario: Your hourly worker is regularly scheduled to report to work at 8 a.m. the next morning for an 8 hour shift. Upon arrival, the employee is told that he/she is no longer needed. Must the employee be paid anything for that shift not worked.

Response: Yes; see Wage Order 4-2001, Section 5, “Reporting Time Pay”. Reporting time pay is to be paid to hourly employees when that employee reports to work at his/her regularly scheduled time, but is not put to work or is given less than half the usual or scheduled day’s work. Reporting time pay is computed as at least half of the hours that employee is scheduled to work during the shift, but no more than four (4) hours of pay. Your Employee Handbook should reference Reporting Time pay and include the following disclaimers:

“Reporting time will not be paid under the following circumstances:

• On a paid “on call” status, called to work at times other than your usual shift

• When operations cannot begin due to threats to the Company or the Company’s  property or when recommended by civil authority;

• When public utilities fail, such as water, gas, electricity, or sewer; and

• When work is interrupted by an act of God or other causes not within the Company’s control.

Additionally, the Company is not obligated to pay reporting time pay under the following circumstances:

• If the employee is not fit to work.

• If the employee has not reported to work on time and is fired or sent home as a disciplinary action.”

“Called In” Pay

Scenario: Your hourly employee is called in to work on a day other than his/her normal work schedule (when there is no specified number of hours the employee is scheduled to work) but is quickly sent home. Must that employee be paid regardless of whether or for how long that employee is put to work?

Response: Yes; see, generally, Price v. Starbucks Corp. (2011) 192 Cal. App. 4th 1136. That employee will need to be paid at least 2 hours pay.

On-Call Pay

Scenario: You anticipate there may be an urgent staffing need for your hourly employee to come in to work on the weekend and you need that person “stand by” and be ready. Must that employee be paid for the time they are waiting for your call?

Response: It depends; generally, see Berry v. County of Sonoma (1994) 30 F.3d 1174. Some employees may be required to stay at home or at work on “on-call” status. On-call time will not be paid if the employee can use the time spent on-call primarily for his/her own benefit. If an employee is assigned to carry a beeper or similar pocket pager but there are no other restrictions, this generally will not constitute hours worked. In determining whether on-call time is work time and must be compensated, an employer should consider the following factors:

  • Geographic restrictions on the employee’s movements;
  • Required response time;
  • Any other limitation on the employee’s ability to use the time for his/her own benefit.

All time spent on callbacks during an on-call period is counted as time worked. Callback time is paid at an employee’s regular rate of pay, as well as any overtime incurred. This includes a reasonable time for travel from the location where the employee was summoned to return to work, to the work site and return.

ORed Flag Tips

Make sure your Employee Handbook covers these alternative pay scenarios and that your scheduler understands the relationship between hours worked and lawful pay practices.

If you have any questions or comments, please contact us!

Shannon Marie Jenkins, Esq.
1920 Main St., Suite 1000
Irvine, CA. 92614
Phone: (949) 756-0684
Direct: (949) 265-3512
Fax: (866) 298-9254


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“Private Fiduciaries Have Their Own Privacy” – by Matthew L. Kinley, Esq.

TLD’s Matthew L. Kinley has written an informative article for Professional Fiduciaries and Elder Care Professionals.  To read Mr. Kinley’s article, please click here.

For questions or comments, please contact Matthew Kinley.

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Labor Compliance Office – the latest SCAM

Click here to view the Labor Compliance Office solicitation.

Above is a solicitation received by many new corporations from a private business in Los Angeles.  This is a solicitation but it looks very real.  The contents state that all businesses are required to have certain posters in plain view of employees for their review.  Failure to post this information can result in fines and penalties.  All of this is true but may not apply to the specific business that is the target of the solicitation.  For example, I recently incorporated a real estate appraiser.  The owner is the only employee of the company.  He obviously does not need to make himself aware of his rights to sue himself!  This compliance notice also attempts to appear very official as if received from a governmental organization.  It is NOT.  It is a solicitation from a private company attempting to confuse new corporations about the charges they are required to pay to state agencies.

About three quarters of the way down the solicitation it states very clearly “THIS IS NOT A BILL.  THIS IS A SOLICITATION”.

Do not be fooled by this and other scams.  Please contact TLD if you have any questions about incorporation or the types of posters required to be displayed at the workplace.

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Why a Prenup? Why Not?

Business owners who invest time and resources in their enterprise, and who are planning a marriage (or remarriage) should look at getting a thorough, well drafted, negotiated prenuptial agreement (or, “prenup”).

Although it’s not the most romantic topic to speak to your fiancé about in the months leading up to the big event, prenups can save future headaches and perhaps more critically – dollars, should the marriage end in divorce. Like a good estate plan (which should go hand in hand), a prenup is insurance for the parties to know the marital estate will not be needlessly robbed of assets by extensive litigation, should the relationship dissolve.

Why? Because even if a business that started before marriage is allocated to one spouse, any increase in value during the marriage, particularly businesses heavily dependent on the spouse’s personal efforts, may be subject to division as marital property. It can be costly to hire forensic experts to divide business interests down the line.  To read more, click here.

Written By: BusinessTips.com Featured Contributor Daniel R. Gold

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New Federal Family Medical Leave Act (FMLA) Regulations & California Pregnancy Related Regulations


The U.S. Department of Labor (DOL) has issued new Family and Medical Leave Act (FMLA) regulations that will take effect on March 8, 2013 as a result of the DOL’s interpretation of the 2010 National Defense Authorization Act and the Airline Flight Crew Technical Corrections Act.

As part of these new regulations, employers with 50 or more employees must post the updated version of the Family Medical Leave Act Poster, Notice C (with a revision date of February 2013) by this Friday, March 8, 2013.  The poster must be displayed in a conspicuous place where applicants and employees may see it.  A copy of the updated version of the FMLA Poster can be found at the following link:


Please remember that California employers with 50 or more employees are also required to comply with the California Family Rights Act, which differs from federal law.


California’s Fair Employment & Housing Commission has recently amended and updated certain regulations pertaining to Pregnancy which include the following notable substantive changes:

  • Expansion of definition of “disabled by pregnancy.” The term “disabled by pregnancy” now includes needing time off for prenatal or postnatal care, gestational diabetes, pregnancy-induced hypertension, preeclampsia, post-partum depression, and loss or end of pregnancy. Please note that the list of conditions is not intended to be exclusive but rather are intended to be illustrative.
  • Prohibition of discrimination based on “perceived pregnancy.” It is now unlawful to discriminate or harass an employee based on “perceived pregnancy,” which the regulations define as being regarded or treated by an employer as being pregnant or having a related medical condition.
  • Clarification of definition of “four months.” An employer must grant up to four months of leave to an employee disabled by pregnancy. The new regulations specify that “four months” means one-third of a year, equaling 17 and one-third weeks.
  • Expanded accommodation and reinstatement rights. The revised regulations provide examples of how an employer can reasonably accommodate employees affected by pregnancy, including modifying work schedules, acquiring or modifying equipment or devices, and providing a reasonable amount of break time for lactation. Additionally, the regulations expand the right of an employee to reinstatement to the same or comparable position.

Employers with more than 5 employees are now required to use the following updated Pregnancy Related Regulation Notices:

For Employers with 5-49 employees, a copy of the updated version of California Pregnancy Disability Leave Notices can be found at the following link:


For Employers with 50 or more employees, a copy of the updated version of California Pregnancy Disability Leave Notices can be found at the following link:


Please be aware that your handbooks and policies may need to be updated to comply with these new regulations.

If you have any questions or would like to learn more about the new FMLA regulations and/or California Pregnancy Related regulations, please feel free to contact Carlos A. Becerra.

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Potential Liability Stemming From a Continuous Violation (Failure to Pay Overtime) May Stretch Way Beyond the Current Statute of Limitations (Up to the Hire Date).


On January 24, 2013, in a landmark ruling affecting Business & Professions Code section 17200 (Unfair Competition Law) cases, the California Supreme Court unanimously held in Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal. 4th 1185 that the common law equitable exceptions to the statute of limitations applied to UCL claims, settling a longstanding split within the Courts of Appeal.  Though the facts of the case did not pertain to labor or employment issues, the Supreme Court’s holding is extremely important for California businesses and employers, as the vast majority of business and employment litigation claims are coupled with UCL claims.


The dispute before the Supreme Court arose from a photocopy equipment lease between Jamsid Aryeh and Canon Business Solutions, Inc.

Mr. Aryeh ran a copying business under the name ABC Copy & Print and entered into two agreements with Canon (one in November 2001 for a black and white copier and one in February 2002 for a color copier) to lease copiers for a 60 month term. The agreements required Mr. Aryeh to pay monthly rent for each copier, subject to a maximum copy allowance.  If Mr. Aryeh exceeded the monthly allowance, he had to pay an additional per copy charge.  The agreements also provided that Canon would service the copiers.

Beginning in 2002, Mr. Aryeh noticed discrepancies between meter readings taken by Canon employees and the actual number of copies made on each copier, and he began compiling independent records.  Mr. Aryeh alleged that Canon employees had run thousands of test copies during 17 service visits between February 2002 and November 2004, which he claimed resulted in him exceeding his monthly allowances and having to pay excess copy charges and fees to Canon.

Mr. Aryeh did not file his complaint alleging Canon violated the UCL until January 31, 2008. In that complaint, Mr. Aryeh alleged that Canon knew or should have known it was charging for excess copies and that the practice of charging for test copies was both unfair and fraudulent.

Canon demurred to Mr. Aryeh’s complaint on the grounds that the UCL claim was barred by the statute of limitations set forth under Business & Professions Code section 17208 for the complaint had not been filed within four years of the first violation allegedly occurring in 2002.  The trial court sustained the demurrer.  Mr. Aryeh filed a second amended complaint that identified 13 overcharges within the four-year limitation period.  After Canon demurred for a second time, the trial court dismissed the action without leave to amend.

The trial court read state law as establishing that the clock on a UCL claim starts running when the first violation occurs.  Consequently, because the amended complaints established a first violation in 2002, the claim was barred by the four-year statute of limitations.  Mr. Aryeh appealed.

The Second District Court of Appeal, in a divided 2-1 decision, affirmed the trial court’s dismissal and held that the common law principles did not apply to avoid the statute of limitations.  The appellate court reasoned Mr. Aryeh knew shortly after entering into his second contract in February 2002 that Canon was overcharging for the test copies, but still waited to bring his case for another six years.  Mr. Aryeh appealed to the California Supreme Court and the Supreme Court granted review.


Justice Kathryn M. Werdegar wrote the opinion on behalf of the seven member California Supreme Court.  Justice Werdegar’s opinion held that the UCL’s silence on the issue of when a UCL claim accrues triggers a presumption in favor of applying settled common law exceptions to UCL claims.

Generally, a cause of action accrues at the time when the cause of action is complete with all of its elements, or when a suit may be maintained.  Thus, the period in which a plaintiff must bring suit or be barred, runs from the moment the claim accrues.  However, Justice Werdegar’s holding opened the flood gates to allowing common law exceptions to UCL claims, the two most pertinent being the continuing violation and continuous accrual doctrines.

As to the continuing violation doctrine, the doctrine aggregates a series of wrongs or injuries and treats the limitations period as accruing for all of them upon the commission or sufferance of the last of them.  The continuing violation doctrine is applied when a pattern of reasonably frequent and similar acts justify treating the acts as an indivisible course of conduct actionable in its entirety, despite some of it having occurred outside and some inside the statute of limitations.  The court rejected the applicability of this particular doctrine to Mr. Aryeh’s complaint because Mr. Aryeh had alleged a series of discrete, independently actionable wrongs, and was therefore not a situation where a wrongful course of conduct became apparent after an accumulation of multiple harms.

As to the continuing accrual doctrine, the doctrine provides that where there is an ongoing duty which is owed that is susceptible to recurring breaches, each breach of the duty owed triggers its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period.   In determining whether the doctrine applied to Mr. Aryeh’s complaint, the court found that (1) Canon sent bills on a regular basis requesting payment for test copy charges that were unfair or fraudulent, (2) Canon had an ongoing duty not to impose unfair charges, and (3) this continuing duty to avoid unfair charges was susceptible to recurring breaches.  As a result, the Court held that the continuing accrual doctrine applied, and a new limitations period began with each alleged improper collection.  Thus, Mr. Aryeh’s allegations concerning monthly charges for copies made by Canon were not completely time-barred.


The Supreme Court’s ruling will have drastic implications for businesses and employers.

At a minimum, plaintiff employees and/or customers who have brought a UCL claim and seek to evade the complete voidance of their claims due to the UCL’s statute of limitations will analogize their case to the Aryeh decision and argue that their claim is only partially time barred under the continuous accrual doctrine.

At the other end of the spectrum, the Supreme Court left the door wide open for plaintiff employee(s) and/or customer(s) to aggregate a series of wrongs or injuries and treat the limitations period as accruing for all of them upon the commission or sufferance of the last of them under the continuing violation doctrine.  So long as the plaintiff employee(s) and/or customer(s) are able to distinguish themselves factually from Mr. Aryeh’s complaint and allege that the defendant in their situation exhibited a pattern of reasonably frequent and similar unlawful acts justifying application of the continuing violation doctrine, such plaintiffs will be able to seek redress for all of the acts as if they were an indivisible course of conduct actionable in its entirety.

Thus, a plaintiff employee who earned $15 per hour and was not lawfully paid 5 hours of overtime per week from defendant employer, may now have a potential claim against their employer for the entire time the employee was employed by the employer (i.e., potentially 30 years).  Putting this into perspective, the value of plaintiff employee’s claim against his/her employer jumped from merely $23,400 [52 wks x 5 hrs per wk x 4 yr statute of limitations x (1.5 x $15)] to $175,500 [52 wks x 5 hrs per wk x 30 yr employment x (1.5 x $15)].

Businesses and employers are encouraged to take heed to the Supreme Court’s ruling and take the necessary steps to make sure that it is in full compliance with the law in order to protect itself as much as possible from potential liability.

If you feel that a former employee(s) and/or customer(s) may potentially have a claim against you and/or your business, please feel free to contact me or any other attorney at Tredway, Lumsdaine & Doyle, LLP.

If you have any questions or would like to learn more about the issues raised by the Court in the decision, please feel free to contact me or any other attorney at Tredway, Lumsdaine & Doyle, LLP.

Written By: Carlos A. Becerra, Esq.



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Bloomberg Businessweek.com Article: “When a Small Employer Gets Sued by a Former Worker”

Tredway Lumsdaine & Doyle LLP (TLD) Partner, Matthew L. Kinley, contributed comments for the Businessweek.com article entitled “When a Small Employer Gets Sued by a Former Worker”.  Here is part of the excerpt from the article featuring Mr. Kinley:

“Another search should be for your business insurance policy, which may include a clause covering legal costs. “Call your insurance broker and quiz him,” says Matt Kinley, a partner in Southern California law firm Tredway Lumsdaine & Doyle. “Most general liability policies do not cover some special areas, like intellectual property cases or employment cases. [But] before you face an adverse legal issue, it is important to have a conversation about special riders to your policies that may be available for any risks that your business may face.”  In Herold’s case, he did have employment liability insurance, which paid all but $10,000 of the eventual $80,000 it took to fight his former employee’s wrongful termination claim over two years.”

To read more of this article, please click here.

To contact Matthew L. Kinley, please click here.

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Managing Partner Daniel R. Gold Authors New Chapter for the “Inside The Minds” Series

The Managing Partner of Tredway Lumsdaine & Doyle LLP (TLD), Daniel R. Gold, has authored a new chapter for the “Inside The Minds” series, ‘Strategies for Family Law in California’. The theme of this new chapter is: “Is That a Light at the End of the Tunnel or an Oncoming Train?”. As noted in the Introduction, the thrust of this chapter is not the 2008 “Great” Recession, but how the practice has fared, and will continue to fare, in spite of the economy. Legislative changes and topical social issues aside, practicing law in this area is really about people. The great lesson for lawyers is that people’s problems cannot always be solved by relying on what your professors told you.

To read the complete chapter, click here. Please read the legal disclaimer on page 2.

To purchase a copy of the book this chapter was originally included in, please visit www.west.thomson.com.

If you would like further information on this subject or to set up an appointment with Mr. Gold, please contact his office at (949) 756-0684.

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What Happens To Your Pet When Something Happens to You?

“This is a confidential memo to you as an animal lover and pet owner: we know that you love your pet more than anything and would do anything to keep them happy, comfortable and part of your family forever. But what happens when something happens to you?

Please consider addressing your pet in your will or trust and be sure that those documents are in conformance with the appropriate state laws. Generally you should plan to have your estate plan prepared for and according to the laws of the state in which you plan to die.

There are multiple ways to ensure your pet will be cared for if something happens to you. For example, you can make an informal promise with a family member, friend or neighbor to take in your pet and hope that he or she will follow through. This method is not binding and may leave you with a false sense of security in the event something happens to you.

A Will Can Work

If you are not going to set up a revocable trust, you can provide for your pet in your will with brief instructions and a monetary gift. But realize that in general, under California law, you cannot give a straight devise (a gift) in your will to an animal. See In re Estate of Russell (1968) 69 Cal.2d 200, 70 Cal.Rptr. 561, 444 P.2d 353. See also California Probate Code section 6102 where permitted devisees (gift recipients) include individuals, corporations, governments and organizations, but do not include animals.

A sample devise could be done as follows:

“I give to my friend, Jennifer Sawday, my beloved German Shepherd named Butch or any other pet I may have at the time of my passing. I also give to Jennifer Sawday the sum of $1,000 dollars. I request that Jennifer Sawday use these funds for the care of my pet, but I do not require that the funds be so used.”

This devise gives instructions as to whom should receive your pet and provides a sum of money to that person. You cannot require that the person use the money for the care of the pet nor can you give your pet money directly.

A Trust Is Recommended

If you desire to give your pet money ostensibly to be used for his or her care, a trust is recommended.

Since 2008, the California Probate Code allows a trust to be set up for the care of an animal.

California Probate Code section 15212 states, in summary, a trust may be created for the care of an animal or animals that are living at the lifetime of the person who created the trust.  In general, such a trust would terminate upon the death of the animal, if only one animal is being provided for, or upon the death of the last surviving animal being provided for in the trust.

For those of you familiar with the rule against perpetuities, such a trust for the term of the life of an animal is not voidable under the rule against perpetuities.  The rule against perpetuities states that a trust cannot last longer than 90 years under California law (think of a young tortoise or parrot who may live longer than 90 years after your passing). California has enacted the Uniform Statutory Rule Against Perpetuities (USRAP) (see California Probate Code sections 21200-21231), which provides that a trust may last at least 90 years before the common law rule is applied.  See California Probate Code section 21205.

Thus, under California Probate Code section 15212, you can set up or include in an existing revocable trust, a provision for your pet.  You can provide who shall receive custody of the pet and designate funds for the care of your pet.  You can provide as much detail as you desire regarding the use of those funds.  You can segregate a dollar amount, or a percentage of your estate for the care of your pet.  You could also state that the entirety of your estate is to be used for the care of your pet and then when your pet dies, the remaining funds will be distributed to your family, friends or organizations as you desire.  In your trust, you can also specify who would be the trustee to oversee the care and the funds for your pet.  The trustee does not need to be the same person who would receive custody of the animal…”

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To contact Jennifer N. Sawday, please call (562) 901-3050 or e-mail jsawday @tldlaw.com.

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