Stark & Stark Shareholder Comments on Increase in Suits in Response to Protocol for Broker Recruiting

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Thomas B. Lewis, Chair of Stark & Stark's Employment Group, was quoted in the February 24, 2010 FinancialPlanning.com article, The Recruiting Wars Turn Nasty. The article discusses the Protocol for Broker Recruiting and the recent decrease in firms suing each other over poached advisors. The article goes on to discuss some of the recent more highly publicized cases which have advisors, and their attorneys, questioning whether or not the days of increased claims and counterclaims are about to return.

Mr. Lewis discusses the fact that both Goldman Sachs and Credit Suisse have not signed on to the protocol, and Mr. Lewis states that Goldman Sachs in particular takes the attitude that the clients belong to the firm, not the advisor, and therefore should not move if an advisor defects.

You can read the full article here. (PDF)

 

Stark & Stark Shareholder Comments on Goldman Sachs Suit

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Thomas B. Lewis, Chair of Stark & Stark's Employment Group, was quoted in the February 19, 2010 On Wall Street article, Goldman Drops Case Against Former Advisors. The article discusses Goldman Sachs' recent decision to drop their case against five former financial advisors and two support staff members (David Greene, Craig Savage, Andrew Thompson, Sharran Srivatsaa, John Pitt, Stephanie Dennard and Kim Tyson). The suit accused the advisors of breaching their non-solicitation agreements by moving to rival firm, Credit Suisse, and attempted to take their clients with them.

 

Mr. Lewis states that these types of cases are typically settled quickly and the firm who poached the advisors will often agree to pay a portion of the revenue generated by any of the accounts that the advisors’ transferred over for a period of 12 months to their prior firm.

 

You can read the full article online here.

When A Subcontractor Should File & Perfect a Lien Claim

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In today’s harsh economic climate, a general contractor or subcontractor is often faced with non-payment from a project owner.  The question then becomes what is the best fashion in order to collect the unpaid balance which is due the general contractor or subcontractor.  As a general contractor, you have a few options.  The first option is to attempt to negotiate a resolution with the owner.  Another option is to file a lawsuit.  If a lawsuit is the preferred option, it is suggested that a Lien Claim be filed within ninety-days of the last date of materials or services were provided pursuant to N.J.S.A. 2A:44(A)-3.  This secures the general contractor’s interest in the property and may provide it with leverage to facilitate a settlement.

For a subcontractor, the best process in which to collect an unpaid amount becomes more complex.  Pursuant to the relevant Lien Statute, N.J.S.A. 2A:44-126, a “subcontractor” is any person or party who has a contract to provide labor or materials with a contractor or with a subcontractor who has a contract with the general contractor.  The purpose of this definition is to limit who may file a Lien Claim against the property.  Like a general contractor, a subcontractor may attempt to resolve the dispute as to the unpaid balance with the general contractor or the subcontractor who hired them.  In the absence of a quick resolution, however, it is often suggested that a Lien Claim be filed by a subcontractor or sub-sub-contractor on the project.  Unfortunately for a lot of subcontractors, this is when a critical error is made with regard to filing a Lien Claim.

Pursuant to N.J.S.A. 2A:44(A)-3, the Lien Claimant shall file a Lien against the owner of the property, or the tenant of the property for whom the contract to perform services exists.  The critical point is that a Lien cannot be filed against the property owner if the tenant contracted to have the work done and the improvement was not authorized in writing by the owner of the property.  This is critical because if a contractor files a Lien Claim against the property owner and not the tenant as well and it is later determined that the improvement was not authorized by the owner, the Lien Claim is invalid and the subcontractor may be left without a claim against the tenant.  As such, the best practice is to always file a Lien Claim against the tenant who is occupying the leased property and for whom the work is being performed and against the property owner as well.  At any time, the contractor can withdraw the Lien Claim against the property owner, however, continue against the tenant if it is found that the improvement was not authorized in writing.  If this procedure is not followed and more than ninety days have passed since the last day materials and services were provided, the contractor may lose its right to bring a Lien Claim against the tenant.

As always, a lawsuit to foreclose upon the Lien must be commenced within thirty days upon request by the tenant or owner or within one year of the date of the Lien Claim was filed, otherwise it will expire.  A subcontractor or sub-subcontractor does not lose its rights to proceed against the party whom directly contracted with it, however, an action to foreclose upon the Lien Claim as well only gives the contractor further leverage.

Oppressed Minority Shareholders Should Be Afforded Protection

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Stark & Stark Litigation Shareholder, Scott I. Unger, authored the article, Oppressed Minority Shareholders Should Be Afforded Protection: An argument for a revision of the Limited Liability Act, for the February 1, 2010 edition of the New Jersey Law Journal.

 

The article discusses the fact that the minority oppression statute, which prohibits majority shareholders in closely held corporations from oppressing minority shareholders, was not specifically incorporated in the statutes governing limited liability corporations. Mr. Unger states that the business section of the New Jersey State Bar Association is considering recommending changes to statutes governing limited liability corporations, one major change would be to specifically state that minority members in an limited liability corporation may sue if they are oppressed. Mr. Unger goes on to discuss the importance of the incorporation of those protections and believes that Court's of Equity should utilize and apply the minority oppression statute to limited liability companies.
 

You can read the full article online here. (PDF)

Stark & Stark Shareholder Comments on Citigroup's Motion To Dismiss In Bonus Pay Class Action

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Thomas B. Lewis, Shareholder and Chair of Stark & Stark's Employment Group, was quoted in the January 14, 2010 RegisteredRep.com article, Citi Files Motion To Dismiss In Bonus Pay Class Action. The article discusses Citigroup's recent decision to file a motion to dismiss a class action lawsuit filed against the firm over the terms of its financial advisor bonus pay agreements. The motion was filed with the U.S. District Court for the Southern District of New York this past Monday, January 11, 2010.

 

Mr. Lewis states that there is a good chance that the court will dismiss the complaint, and goes on to say, “realistically it’s an issue that’s subject to FINRA’s jurisdiction. The plaintiffs tried to get out of the FINRA arbitration by getting class action status for the case. But courts are reluctant to get involved if there is FINRA jurisdiction.”

 

You can read the full article online here. (PDF)

Contracts - Construction: Validity of Paid When Paid Provision

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In the matter of Brolley Electrical v. Ernest Bock and Sons, Inc., the Court reviewed the validity and enforceability of a “paid when paid” provision within a construction contract.  The contract provided that payment by the owner to the general contractor being a condition precedent prior to the general contractor is obligated to pay the subcontractor. 

 

The contract further provided that should the general contractor not receive payment from the owner that the general contractor would not be obligated to pay the subcontractor for the work performed.  In validating the enforceability of the “paid when paid” provision, the Court explained that where the condition precedent to payment was clear and unambiguous, there is no room for interpretation and the Court must strictly construe the terms of the contract . 

 

The Court distinguished this decision from other opinions by stating that the condition precedent language within the present “paid when paid” clause rendered the clause wholly enforceable in nature and did not require payment until corresponding payment is received by the general contractor.  For these reasons, the Court ruled that the “paid when paid” clause and the conditioned precedent language was enforceable, and therefore, no payment was due to the subcontractor until and unless payment is received by the general contractor from the project owner.

Builders, Contractors and Homeowners: Beware Insurance Carriers Are Delegating Construction Deficiencies Coverage

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Construction Litigation Group Chair, Donald B. Brenner, and Litigation Shareholder, Thomas J. Pryor, authored the article Builders, Contractors and Homeowners: Beware Insurance Carriers Are Delegating Construction Deficiencies Coverage for the October 19, 2009 edition of the New Jersey Law Journal.


The article discusses a recent trend in New Jersey in which builders and homeowners are left without insurance coverage for property damage caused by substandard work performed by subcontractors. Due to the recent rise in bankruptcies and business failures, denying homeowners insurance coverage would leave homeowners without any avenue of recourse.
 

You can read the full article online here.
 

Constitution Law: Right to Privacy - Expungements

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In Nunez v. Pachman, the Appellate Division recently discussed the section of the Expungement Statute which prohibits the disclosure of any information relative to the records, proceedings or any other related documents once an event is expunged.  In Nunez v. Pachman, the Appellate Division explained that the litigation privilege will not permit the disclosure of any expunged arrest or proceeding.  Moreover, the Court hinted that a private party may potentially possess a cause of action for damages should a disclosure cause harm to this party.  This reaffirms the section of the Expungement Statute which prohibits the disclosure of any expunged records once an expungement is granted.
 

Retrofitness Sued By New Jersey Fitness Club Owners

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Model A Fitness of Boonton, New Jersey has sued Retrofitness for fraud, consumer fraud, breach of contract, and violations of New Jersey’s Franchise Practices Act. Retrofitness Enterprises and Retrofitness Corp. owns, operates and franchises body building, health and fitness facilities under the “Retrofitness” trademark. The Retrofitness lawsuit is being watched by franchisors and franchisees alike.

 

Retrofitness franchises have been steadily increasing in number over the last few years.  Back in November 2005, Retrofitness entered into a license agreement with Model A’s owners for the development of a facility in Boonton, but Model A alleges in its Complaint filed in New Jersey Superior Court that Retrofitness’ principal, Eric Casaburi, enticed them into the license agreement through a series of false promises and misrepresentations, and then attempted to coerce them into signing a franchise agreement on far less favorable terms for the owners.  When the owners refused, Retrofitness terminated the license agreement and, according to the Complaint, opened a new location up the street which unfairly competed with Model A. 

 

The case is being watched because it raises significant issues under the Franchise Practices Act, and also because it will test the applicability of New Jersey’s Consumer Fraud Act generally to franchises.  The Complaint filed in New Jersey Superior Court can be viewed online here.

Be Clear With Your Company Email Policy

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In a recent New Jersey Appellate Division Decision, Stengart vs. Loving Care Agency, Inc., the New Jersey Superior Court, Appellate Division, clarified when a company/employer can review and access an employee’s emails when the employee uses company technology to receive emails.  Many employees mistakenly believe that personal emails received on a company computer are private.  The Stengart case provides guidance on how email and internet policies should be drafted in the company/employee handbook.  The law holds that electronic communication policies must be drafted with unambiguous language alerting employees that the employer retains the right to monitor and review emails of the employee for any legitimate business purpose.  Although the Stengart Court did find that the company’s electronic communication policy was subject to claims of ambiguity, it is clear that a well-drafted electronic communication policy will properly advise the employee that there will be no expectation of privacy for that employee’s personal emails received on a company computer and that the company may review employee’s emails for any legitimate business purpose.  The policy should also advise the employee that use or misuse of company technology for non-business purposes violates company policy and may subject the employee to disciplinary action.

The Stengart Court clarified that a carefully crafted electronic communications policy will allow employees to understand that the employer retains the right to access electronic communications when the employee uses company technology.  This well-drafted policy will alert the employee that there is no expectation of email privacy, and will shield the employer from liability for reasonably reviewing an employee’s email on the company technology.

Older Entries

September 4, 2009 — Federal Circuit Overrules Medinol Standard for Proving Fraud in Registering a Trademark

August 25, 2009 — Contesting a Will - State Court or Federal Court

July 21, 2009 — Squeeze-Out Technique: Withholding Information

June 11, 2009 — Stark & Stark Shareholder Comments on New Jersey Supreme Court Ruling Concerning to the New Jersey Consumer Fraud Act

May 22, 2009 — Stark & Stark Shareholder Comments on Enforcement of Brokers Bonus Repayment

May 20, 2009 — Litigation Strategies For Business Seminar

May 13, 2009 — Contesting a Will In New Jersey

April 27, 2009 — Are You Oppressed? Truth and Consequences for Minority Shareholders

March 27, 2009 — Squeeze-Out Technique: Excessive Compensation

March 20, 2009 — Squeeze-Out Technique: Termination of the Minority Shareholder's Employment

March 12, 2009 — Stark & Stark Shareholders to Present Strategies For Commercial Litigation Seminar

March 9, 2009 — Stark & Stark Shareholder Comments on Breach of Protocol for Broker Recruiting by Smith Barney Employees

March 6, 2009 — Squeeze-Out Technique: Withholding Distributions

February 27, 2009 — A Panoramic Discussion of the Squeeze-Out Techniques Often Used By Majority Shareholders

February 19, 2009 — Stark & Stark Shareholder to Present CLE Seminar Discussing Business Break-ups

February 2, 2009 — Squeezed Out By Your Business Partner?

October 29, 2008 — Protocol for Broker Recruiting

October 21, 2008 — Identifying When Your Trademark Has Been Infringed Upon

August 25, 2008 — Preventing Employee Theft

August 19, 2008 — Equal Protection: A State Employee Is Not a "Class-of-One"

August 15, 2008 — Claim of Undue Influence Resolved by Court Before Death of Testator

July 29, 2008 — Proper Registration of Fabric Dresses Sufficient to Defeat Fraud on the Copyright Office Claims

July 24, 2008 — Patterns, Lace and Fabric Designs Incorporated Into Dresses are Copyrightable

June 24, 2008 — Minority Oppression Claims: A Primer on Acting, Standing, Remedies and Valuation

May 16, 2008 — Case Questions Retroactivity of Change to Offer-of-Judgment Rule

May 8, 2008 — Stark & Stark Shareholder Wins $699,000 Verdict in Breach of Contract and Copyright Infringement Case

April 25, 2008 — Recent Revisions to the Trademark Trial and Appeal Board Rules

April 1, 2008 — Can A Message Board Violate New Jersey's Consumer Fraud Act?

March 25, 2008 — Minority Oppression in Relation to "Fair Value" of Stock

January 30, 2008 — Supporting the Right to Obtain a Disability Carrier's Underwriting Manuals

November 28, 2007 — Internal Investigations: Currnet Issues, Practical Guidance

October 10, 2007 — Mediator Privilege

August 28, 2007 — A Nutshell on Marketability & Minority Discounts in New Jersey

August 13, 2007 — Litigation Gets Personal

August 6, 2007 — Californian Can Be Sued in NJ for Alleged Libel on Internet

May 18, 2007 — New Jersey Legal Update - Podcast # 66

May 16, 2007 — Punitive Damages in Employment Cases Continue to Pose a Danger for the New Jersey Franchise Community

May 9, 2007 — New Jersey's Investigation of Student Loan Industry's Dealings With Colleges and Universities

May 2, 2007 — Proof of confidential Relationship Creates Heavy Burden on a Party Receiving a Gift

April 10, 2007 — The Enforceability of an E-Mail as an Agreement to Share or Transfer a Copyright

March 30, 2007 — New Jersey Legal Update - Podcast # 62

February 23, 2007 — New Jersey Legal Update - Podcast # 60

February 22, 2007 — Restrictive Covenant Agreements For Franchises

February 8, 2007 — Helping OSU Graduates Succeed

February 1, 2007 — Wal-Mart Settlement Saves Company Money

January 26, 2007 — New Jersey Legal Update - Podcast # 58

January 19, 2007 — New Jersey Legal Update - Podcast # 57

January 17, 2007 — Electronic Discovery in Employment Law

January 8, 2007 — New Jersey Consumer Fraud Act

January 5, 2007 — New Jersey Legal Update - Podcast # 55

December 13, 2006 — Employment Law Minefields

November 20, 2006 — Employee Handbooks

November 16, 2006 — Counsel's Selection and Compilation of Discoverable Documents Should Be Protected Under the Work Product Doctrine

November 14, 2006 — What is Legal Fraud?

November 13, 2006 — Sub-subcontractor's Claim Against an EPC Contractor or Owner Based Upon a Third-Party Beneficiary Theory

November 9, 2006 — What Is The Parol Evidence Rule?

November 7, 2006 — Sub-subcontractor's Claim Against an EPC Contractor Based Upon Unjust Enrichment or Quantum Meruit Theories

November 3, 2006 — Disputes and Defenses with Regard to Lien Enforcement Lawsuits Under the New Jersey Construction Lien Law

November 1, 2006 — Consideration: A Required Element For An Enforceable Contract

October 25, 2006 — Making a Total Cost Delay Claim Against an EPC Contractor

October 17, 2006 — Subcontractor's Burden to Prove EPC Contractor Caused Delay

October 12, 2006 — Arbitrator's Right to Issue a Subpoena to a Non-Party, Out-of-State Witness

October 5, 2006 — The Case for Temporary Lawyers

October 4, 2006 — New Jersey Construction Lien Law's Lien Fund Concept

October 3, 2006 — Insurer Claims Hedge Fund Depressed Stock Prices

October 2, 2006 — EPC Contractors and Construction Liens

September 28, 2006 — Safeguards and Protections Against Improper Lein Filing Under the New Jersey Construction Lien Law

September 13, 2006 — Opinion Testimony of EPC Contractors' Professional Employees Should Be Admissible Under FRE 701

September 5, 2006 — Certificate of Insurance Does Not Establish Insurance Coverage

September 1, 2006 — New Jersey Legal Update - Podcast # 45

August 31, 2006 — Enforceability of "Third-Party" Non-Competition Agreements

August 29, 2006 — Class Action Suits

August 25, 2006 — New Jersey Legal Update - Podcast # 44

August 18, 2006 — New Jersey Legal Update - Podcast # 43

August 9, 2006 — ABA Opinion Sets Standards for Negotiations in Mediations

August 2, 2006 — Nurses Allege Wage Conspiracy

August 2, 2006 — New Jersey Supreme Court Rules That Independent Auditors Can Be Liable for a Corporate Client's Fraud

July 10, 2006 — Valuation in Minority Oppression Litigation

July 5, 2006 — Domino's Franchisees Seek Delivery From Papa John's

June 26, 2006 — Legal Tips for Livestock and Exotic Animal Breeders

June 19, 2006 — "Prompt Pay" Bill

May 26, 2006 — New Jersey Legal Update - Podcast # 34

May 23, 2006 — Electronic Monitoring of Employees

May 15, 2006 — Boston Town and Power Giant Give Mediation A Try

May 9, 2006 — Compensation Rules for Those Subpoenaed to Testify at a Deposition

May 3, 2006 — What Constitutes an Adverse Employment Change to Subject an Employer to Liability?

April 5, 2006 — Weiner Chairs Sale of Small Business Seminar

March 31, 2006 — New Jersey Legal Update - Podcast # 32

March 20, 2006 — Digital Millennium Copyright Act and Trademark Law

March 1, 2006 — New to Franchising? Beware of New Jersey Employment Law Requirements

February 14, 2006 — In Franchising: State Law Really Does Matter

February 3, 2006 — New Jersey Legal Update - Podcast # 25

January 25, 2006 — Appellate Division Rules On Mediator Confidentiality

January 20, 2006 — New Jersey Legal Update - Podcast # 23

January 12, 2006 — Judge Cautions Litigants Regarding Trial Costs

January 10, 2006 — New Jersey District Court Finds Forum-Selection Clause Enforceable in Franchise Arbitration

January 5, 2006 — Restrictive Covenants in a Physician's Employment Agreements

December 23, 2005 — New Jersey Legal Update - Podcast # 20

December 16, 2005 — New Jersey Legal Update - Podcast # 19

December 16, 2005 — Construction Lien Law - Counsel Fees