Business Law

Published on: February 19, 2019

Rubio Introduces Freedom to Compete Act

contract-1464917__340-300x200 Senator Marco Rubio recently introduced the Freedom to Compete Act. This proposed law would prohibit employers from entering into or enforcing non-compete agreements with lower level employees while simultaneously protecting employers’ trade secrets.

Non-Compete Agreements

Non-compete agreements are binding contractual restrictive covenants which limit an employee’s ability to compete with her employer after she leaves or while she is employed. These agreements normally prohibit the employee from forming a competing business, and also from directly or indirectly capacity by working for a competitor or soliciting their employer’s customers.

Published on: February 9, 2019

Fiduciary Duties: Rights and Obligations to Fellow Owners

by Maurice W. McLaughlin

The Benefits and Responsibilities of Ownership

Becoming the owner of a business has tremendous advantages: Owners can rise or fall based on their own merits, and when expenses are paid the remaining profits belong to the owners. However, there are also disadvantages, such as the risk that the business will lose money, and responsibility for the business’s payroll and debt. In addition to this stands business owners’ duties to their co-owners, be they partners in a partnership, shareholders in a corporation, or members in a limited liability company.

Under New Jersey business law, owners are placed in a special position of trust vis a vis their fellow owners, and the law thus imposes special responsibilities on them. These responsibilities are known as “fiduciary duties.”

Published on: February 8, 2019

Thank You, National Enquirer, For Showing Us How Not to Negotiate

by Maurice W. McLaughlin

Dunce Earlier this year the Enquirer published an embarrassing story with text messages and photos of Jeff Bezos, the owner of Amazon and the richest man in the world, with his mistress. Bezos also owns the Washington Post, which has investigated the Enquirer’s relationship with President Trump, and published critical stories about the Enquirer. The same day the story was published, Bezos and his wife, the author MacKenzie Bezos, announced their divorce. Bezos tasked his security chief, Gavin de Becker, with investigating how the Enquirer obtained the text messages and photos.

Then, on February 7, Bezos posted a blog post accusing the Enquirer of threatening to post more embarrassing photos and text messages if Bezos did not drop the investigation. Bezos claimed that the threats were made by a lawyer for the Enquirer through email.

And thus, if true, the National Enquirer has taught us all a great lesson about what not to do in negotiations.

Published on: February 4, 2019

New Jersey Solid Waste Transportation: NJDEP Regulations

by Pauline M.K. Young

New Jersey solid waste transportation is highly regulated by the New Jersey Department of Environmental Protection (“DEP”). While most businesses in New Jersey require some level of truck-3503831__340-300x200 regulation, licensing, and/or registration, garbage hauling is a particularly scrutinized industry.

Part of the authorization process (and ongoing regulation) of solid waste transporters includes obtaining a Certificate of Public Convenience and Necessity (“CPCN”). A CPCN provides the State with specific information regarding a hauler’s operations including hours of operations, owner information, exact fees and rates charged by that hauler to customers, territories (counties) served, and the financial condition of the company. Once a CPCN is obtained, the transporter must file annual reports (also known as utility reports) to update all of that information.

The requirement’s for a CPCN are set forth in the Solid Waste Utility Regulations. These rules and regulations are quite specific and far-reaching into many of the operations of the transportation company.

Published on: February 1, 2019

Employees’ Duty of Loyalty, Competition and Customer Lists

by Maurice W. McLaughlin

the-dollar-3125419__340-300x200 Some of the areas in which businesses make their largest investments of time and expense are trade secrets (including customer lists) customer relations and client development, and employee development. However, these interests may conflict, especially when highly placed employees leave a firm. This is an area of potentially bitter dispute in New Jersey business law and employment law.

Businesses have many trade secrets, but the most important of these is often information regarding its customers. Because of intense competition, and the time, effort and expense which businesses invest in cultivating their clients, customer lists, especially customer lists in service industries, are protected by the common law and New Jerseys Trade Secrets Act.

Businesses also invest significant expense in training and developing their employees, even aside from salary and benefits. Thus, New Jersey business law and employment law imposed a duty of loyalty on employees, even those who do not have a restrictive covenant. This duty of loyalty prohibits employees from competing with their employers while they are employed. An employee may not induce her employer’s employees or customers to leave her employer, nor may she appropriate her employer’s trade secrets. The employee may plan to leave, and if the employee does not have a restrictive covenant she can even seek employment with competitors or even set up a business entity which will compete with the employer after she leaves. However, the employee cannot go beyond the planning stage while still employed.

Published on: January 30, 2019

New Jersey Supreme Court Clarifies Rules on Business to Business Consumer Fraud

by Maurice W. McLaughlin

New Jersey’s Consumer Fraud Act provides some of the strongest consumer protections in the United States. These protections have long been extended to consumers which tow-truck-309953__340-300x176 are business entities. It is one of the strongest of New Jersey’s business law. However, the parameters of when a business, as opposed to a person, was acting as a “consumer,”have yielded conflicting decisions. The Supreme Court of New Jersey has recently issued an important decision affirming business to business consumer fraud, and establishing a test to clarify when a business should be considered to be a “consumer,” and when goods are considered “merchandise” invoking the protection under the Consumer Fraud Act.

The All The Way Towing Case: Background

On January 24, 2019, the New Jersey Supreme Court issued its opinion in the case of All the Way Towing, LLC v. Bucks County International, Inc. In that case All the Way Towing (ATW) , a limited liability company in the towing business, ordered an “International” brand all wheel drive truck from Bucks County International, Inc. (BCI), with an autoloader tow body manufactured by another company, Dynamic Towing Equipment and Manufacturing, Inc. (Dynamic). ATW spent several months negotiating the price and specifications with BCI’s salesperson, and then placed a $10,000 deposit.

Published on: December 20, 2018

New Jersey Contract Law Provides Remedies to Third-Party Beneficiaries

by Maurice W. McLaughlin

rules-1339917__340-300x231 Very often, a person or business will want to confer a benefit on a third party but will not be able to do so itself, for a variety of reasons. So then, to make sure the benefit will be conferred, it will enter into a contract with a person or business which has the ability to confer the benefit. The question, then, is what rights does the third-party beneficiary have?

Let’s say Sam wants to build a deck for his friend Joe’s house, but Sam is an incompetent carpenter. So Sam signs a contract with Acme Building Contractors, Inc., in which Acme agrees to build a deck on Joe’s house, and Sam agrees to pay Acme $5000. Sam pays Acme in full but it never builds the deck, and then Sam dies. Now Acme has $5000 and Joe doesn’t have a deck. Does Joe have any remedies to enforce Sam’s contract with Acme? That all depends on whether Joe can be considered a third-party beneficiary under New Jersey law. The basic answer is yes, if Sam and Acme intended Joe to be a third-party beneficiary.

New Jersey Law Expressly Allows Third-Party Beneficiaries to Enforce Contracts

Published on: December 4, 2018

New Court Rules Streamline New Jersey Business Litigation

by McLaughlin & Nardi, LLC

tax-739107__340-300x200 New Jersey’s Supreme Court adopted new rules which became effective September 1, 2018. These rules amend New Jersey’s Rules of Court to make the litigation of complex business law matters more efficient. This article discusses some of the major changes the new rules have brought about.

Background

In 2000, the Supreme Court revised the discovery procedures in New Jersey’s Court Rules for civil cases. These amendments were adopted because the courts in various counties had developed different discovery procedures. The Supreme Court’s aim was to standardize these rules so that litigants would get the same level playing field in every county throughout the state. However, in adopting three basic case tracks, the Court may have gone too far in limiting judges’ ability to manage complex business law cases. The Supreme Court therefore explored establishing a separate track for complex commercial cases.

Published on: November 28, 2018

Key Documents and Considerations when Purchasing a Franchise in New Jersey

by Jennifer C. Meusel

italian-food-2361054__340-300x200 Before you enter into an agreement to purchase a franchise, it is vital to review and understand the documents you are being required to sign. You will be required to execute the following documents:

1) The Franchise Disclosure Document, previously known as the Uniform Franchise Offering Circular, provides information regarding the franchise’s history, the nature of the business and the products or services it provides, as well as the costs and fees imposed the franchisor, the operational requirements, and historical financial information.

It will, of course, state that past success does not guarantee future success, but it should give you details of the business up to the present date. It must include mandatory disclosures pursuant to the Code of Federal Regulations, Volume 16, Part 436, see The Franchise Rule Compliance Guide.

Published on: September 17, 2018

Protecting Business Information Under the New Jersey Trade Secrets Act and With Confidentiality/Non-Disclosure Agreements

by Maurice W. McLaughlin

confidential-1726367__340-300x300 Businesses entering into negotiations with other businesses or persons often need to give the other party confidential information. For example, a business will need to give a potential buyer information regarding its revenue, expenses, customers, formulas, payroll, vendors, and pricing so that the potential buyer can formulate an offer during the due diligence period. If the deal falls through the seller will rightly want to ensure that the buyer which backed can’t use this information to compete with it or disclose it to competitors or customers.

Fortunately, New Jersey business law gives such companies two important tools to protect their information: The New Jersey Trade Secrets Act and enforceable confidentiality agreements (also known as non-disclosure agreements, or “NDA’s”).

The New Jersey Trade Secrets Act