Articles Posted in Commercial Litigation

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On September 27, 2012, Christopher Slottee, a partner with Atkinson Conway & Gagnon, will be participating in a seminar on Commercial & Residential Landlord-Tenant Law. Mr. Slottee will be presenting information and materials on Alaska law regarding residential leases and the obligations of landlords and tenants. Other topics that will be addressed at the seminar include commercial lease issues, the eviction process, and when a tenant or landlord file for bankruptcy.

The seminar is being organized by Sterling Education Services. You can register for the seminar at this link.

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Collecting a judgment can be a real pain. The paperwork can be daunting to the uninitiated. A mistake in the smallest of details can trip you up in getting the official machinery moving in your direction, especially since the Alaska Court System can be slow to process execution packages even when everything is in order.

It seems like an odd sort of problem to have. The whole point of the civil justice system is to give private parties an effective dispute resolution procedure so that they don’t settle things out in the streets. In view of that aspiration, you might think that making use of the ultimate hammer – execution – would be looked upon with favor. I mean, the claims have already been fully adjudicated before a judgment even gets entered. What more is there to decide?

Guillotine_%28PSF%29.pngBut this is not the view the Court System or even the Alaska Legislature seems to have. There always seems to be another hurdle to overcome, another exemption to adjudicate, or a waiting period to hold things up just a little while longer. The extra time and expense it takes to collect just bogs down the whole process and, in some instances, makes enforcement of the judgment impractical.

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I’ve found a few minutes to make some notes updating prior posts here on the Alaska Law Blog.

(Hey, I’ve been distracted. Inspired by legal work I did for a couple of local entrepreneurs, I got to brainstorming ideas for possible new products for the unique Alaska market. Like one that consists of SAD lights with mudflap silhouettes stuck on them. Could be a seasonal big seller!)

H-P v. Hurd. I wrote about H-P’s bold lawsuit against its former CEO Mark Hurd just a few weeks ago. H-P apparently wasn’t all that serious about the case, seeing as how it was going to be a tough one to win anyway. H-P quickly settled with Hurd. Hurd has to give back some 350,000 H-P shares (worth maybe $14 million) that he received in his H-P severance package.

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Big time litigation is the sport of kings. A very recent example of a regal slugfest comes to us this week from the news headlines. We find that HP has sued its former CEO Mark Hurd because Hurd has signed up to go to work for Larry Ellison at Oracle. When it comes to the Kings of the Silicon Valley tribe, this is a fight between some of the heaviest hitters.

You can find a copy of the complaint HP filed in the Santa Clara County Superior Court here. The fascinating thing about this case – other than the prominent personages involved — is that HP did not have a broadly written covenant not to compete in Hurd’s employment contract. Instead, the contract (as disclosed in HP’s complaint) had only a limited non-compete that, so long as Hurd stayed in California, was specifically tied to the misuse of confidential information.

The lack of a broadly written covenant-not-to-compete means HP has to build one out of the clauses protecting trade secret information that were in Hurd’s contract. HP’s complaint seeks to lay the groundwork to do just this. While this kind of thing is entirely possible in some jurisdictions in the country, it is going to be a tall order to achieve in California. The California appellate courts are on the record as explicitly rejecting the “inevitable disclosure doctrine,” which is what HP’s complaint essentially asserts.

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This is still a free country, so long as you have your immigration papers in order. Freedom of contract is one of the central principles of American law that is even recognized in the Constitution (in a kinda, sorta way). But this does not mean that you can put any damn thing into a contract and expect to be able to enforce it.

We’ve touched on this theme before, but a recent Ninth Circuit decision underscores the point. In Narayan v. EGL, Inc. three guys in California who drove delivery trucks for EGL, a Texas based company, sued for overtime compensation, reimbursement of business expenses, and other obligations California law says employers have to pay. EGL stiff-armed the drivers by pointing out that the contracts the guys signed said they were independent contractors, not employees. The contracts also said that Texas law governed their relationship.

somalia-pirates.preview.jpgAmazingly enough, the trial judge – apparently another platinum level member of the Adam Smith fan club — accepted EGL’s position. He ruled that Texas law applied and shackled the drivers with the distainful servitude of being mere independent contractors.

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It does not happen often. Usually judicial decorum and hidebound notions of professionalism prevent it. But every once in a great while, an appellate court takes a swipe at a lawyer. No matter what a lawyer does or fails to do in arguing a case, appellate judges usually let it pass without comment. So it was a bit jarring – but nonetheless refreshing — to find Chief Judge Alex Kozinski of the Ninth Circuit upbraiding a D.C. intellectual property law firm in a recent opinion.

The case was Toyota Motor Sales v. Tabari. It seems Mr. and Ms. Tabari made a living by brokering the sale of Lexus automobiles. They practiced their trade through that series of tubes we all know so well as the Wonderful World Wide Web. Their websites were named “buy-a-lexus.com” and “buyorleasealexus.com”. Toyota wanted to stop the Tabaris from including “lexus” in their domain names. So it sued them for trademark infringement.

marmot1.jpgNow, anyone familiar with Chief Judge Kozinski’s views on the First Amendment and trademarks ought to know how this one was likely to come out. The Honorable Judge Kozinski is on record as a stalwart defender of free speech and as a guy who looks skeptically at any broad application of intellectual property rights. In an interview he gave to the libertarian magazine Reason a few years back, the Chief Judge said: “Owners of copyrights and other intellectual property rights are very grabby. They think they own everything, or they think they invented everything.”

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Smarter fellows than I have observed that the rules of evidence are a systematic effort to keep the truth from seeping into the courtroom. As one of the authors of the Notable British Trials series observed way back in 1933, the “law of evidence has been built up by generations of judges distrustful of the capacity of juries.” The evidence rules are the law’s way of saying that the trial judge is the only one in the courtroom with a lick of common sense.

Obviously this thesis overstates things a smidge. But I fear that the Alaska Supreme Court’s recent decision in Mueller v. Buscemi demonstrates that there is actually something to this view. (And, yes, I admit that I only read the opinion because I thought it might involve wacky Steve Buscemi or the Coen Brothers. Sadly, it does not and the entertainment value of the decision is vastly reduced.)

The Mueller case involved a simple slip and fall in a parking lot outside a commercial building. (Warning: Gravity In The Area!) The plaintiff rolled snake eyes in front of the jury on her claim against the building owner. The plaintiff blamed the adverse outcome on the trial judge not allowing in evidence of other accidents. Specifically, the trial court kept the plaintiff from giving the jury evidence that a pregnant woman fell in front of the building two weeks before the plaintiff’s accident; that on the same day as the plaintiff’s accident another woman complained about falling in front of the building; and that on the same day as the plaintiff’s accident, a guy fell and hurt his knee in front of the building.

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This post is a follow-up to a couple of prior postings. I realize this makes it look like I lack creativity since I’m not saying anything new. But I can’t help it. The fascist running dog who is the Virtual Managing Editor of the http://www.alaskalawblog.com has insisted that I do more linking back to prior blog postings. He says this is necessary for “search engine optimization.” I don’t even know what that means. Goofy legal stuff — like maiden rents or the fertile octogenarian — I understand. Website technospeak, I don’t get.

In any event, updating of a couple of earlier blog postings is my attempt at keeping the e-tyrant at bay.

On the first of October, I wrote about limitation of liability clauses in this post. I ran into a problem with one of these horrid clauses a week or two ago and had to forcibly cut its heart out. In the process, though, I found a 2008 Colorado case that I think illustrates the points I was making in the earlier post.

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One businessman shakes hands with another. They have just struck a deal and signed a contract. Each guy thinks he’s going to get something out of the transaction. But one guy could be dead wrong about what he’s getting.

You see, the cagey guy of these two has built an escape hatch into the contract. He’s limited his downside risk by stacking the deck in his favor. If he breaches his obligations under the contract, he’s got it set up so that the other guy can’t do much about it. He’s slipped in a provision that says the most he can liable for is the equivalent of the fees he was paid in the deal. Perhaps the provision even restricts that further to just a month or so of the fees that have been paid. So if it happens that the other guy loses out on $5 million in profits because the cagey guy did not perform as promised, all the other guy can claim under the terms of the contract is the $999.95 that the cagey guy charges every month for his services (which, of course, he fails to actually perform).

Is this legal? Can Mr. Nanny-Nanny-Boo-Boo really skate out of his responsibilities that way? As with many other areas of the law, the answer is a resounding MAYBE!

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Bob Dylan, genius poet and songwriter that he is, had a terrific line in the song Shelter From The Storm. Well, actually, the whole song is downright terrific but I want to focus in on this one particular line. (The song was from Dylan’s masterpiece album Blood On The Tracks.) The line I refer to goes as follows:

“I bargained for salvation an’ they gave me lethal dose.”

(To get the full effect, you have to wail out the line with squinting eyes and keening voice.)