I do not know about you but regardless of the claims in litigation these days, whether defending a direct claim or a cross-claim, director’s and officers are being sued as individuals way too often. Clients ask why is this possible and why aren’t plaintiff’s counsel held to a standard preventing this type of pleading.

Rules for the Road: (1) Plaintiff of course must have a good faith basis for any claim made in complaint and lawyer is held in California to the obligation to “support state laws” See Cal CCP 128.5 re “frivolous claims” and Cal. B&P 6068(a) Cal B&P 6068(a) (2) Plaintiff has burden of establish facts to support claims. CCP 425.10

<1) Don't forget about tendering claims to insurance and requesting appointment as Cumis counsel
Before I go into the substantive issue, remember to advise your clients that when they - in any form - are sued, they may be entitled to have their own lawyer in addition to the lawyer appointed by their insuror, and the insuror may be forced to pick up the fees. Of course, read the reservation of rights letter that comes from the insuror after tendering and consult insurance counsel to determine whether the client has right to appoint Cumis counsel. (See generally Reservation of Rights and e.g. Original Cumis Case See also California Civil Code §2860, as outlined in Buss v. Superior Court, (1997) 16 Cal.4th 35 . Under that statute, a conflict of interest may exist “when an insurer reserves its rights on a given issue and the outcome of that coverage issue can be controlled by counsel first retained by the insurer for the defense of the claim…”

(2) Are facts alleged that the officer acted independently to participate or sanction the wrongful act?
Directors and shareholders of a corporation do not incur personal liability for torts of the corporation merely by reason of their official positions, unless they participate in the wrong or authorize that it be done (see Frances T. v. Village Green Owners Assn. (1986) 42 Cal. 3d 490, 503-504). The facts must show that the officer, shareholder, director “directed, authorized, or in some meaningful sense participated” in the wrongful act. It is not enough that they were the officer of the entity at the time the wrongful act “occurred.”

(3) Failure to Supervise Does Not Establish Individual Liability on Part of Officer.
Further cases state that absent personal misconduct by the supervising broker, the designated officer of a corporate broker does not assume personal civil liability to third persons based solely on failure to supervise a salesperson (see In re Grabau (N.D. Cal 1993) 151 B.R. 227; Walters v. Marler (1978) 83 Cal. App. 3d 1, 35). An officer or director of a corporate broker who is negligent in failing to properly supervise the activities of a fraudulent or negligent salesperson is not liable to third persons for the salesperson’s conduct. (Walters v. Marler at 35).

Our practice focuses on helping established private technology-based companies or creators who are frustrated by being ripped off! They may, for example, be concerned about a competitor who uses unfair tactics, an employee who leaves with copies of their files or a business partner who fails to live up to a promise. In some cases, we have represented investors and businesses regarding their obligations to perform in an investment setting. We also have experience in contentious business and partnership dissolutions and tax related litigation representing professionals in related litigation. Most of Gregory’s litigation work takes place in the federal court. However, Gregory has litigated in state court too. After first starting as a litigator and then practicing as a transactional lawyer, Gregory brings both sides of the puzzle together.

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On July 18, 207, the California Court of Appeals in Douglas v. Talk America, Inc. called into question online agreements that add new terms when both parties do not consent. “A party can’t unilaterally change the terms of a contract; it must obtain the other party’s consent before doing so.”

Forbes on Rutchik on posting code to hack DVD’s: “Digg will have to figure out what they are,” he says. “Are they a passive conduit, or are they a facilitator for hackers? They’re in a difficult position.”

“Perhaps the greatest difference between the RIAA’s case and Viacom’s is that Viacom doesn’t want to stop YouTube from operating. If it did, says Rutchik, Viacom would have asked the courts to shut Google down to ensure that its copyrighted material was not uploaded, or in some cases slightly changed and re-uploaded after being removed. Instead, Viacom asked for damages, a “declaration that defendants’ conduct willfully infringes Plaintiffs’ copyrights,” and an injunction requiring YouTube and Google to, in essence, adopt better technology to prevent or limit their copyrighted material from uploading.” Businessweek on Rutchik on Viacom v. Google.

- do you sell technical services to the adult industry?

ENTRE-PORN-EUR: PORN and Capitalism

by Gregory Rutchik