The Court concluded that the expense to be incurred by a single plaintiff merchant bringing such a claim (in this case, an antitrust claim) meant that only an aggregation of plaintiffs and their claims could make it feasible for such claims to be brought at all.  Consequently, the Court concluded, the contractual class action waiver at issue “should not be enforced because enforcement of the clause would effectively preclude an action seeking to vindicate the statutory rights asserted by the plaintiffs.”

While the Court emphasized that it was “concerned solely with the class action waiver contained in the contract between the parties before us,” it is not difficult to make the argument, inevitably to be made by plaintiff attorneys, that the Court’s reasoning necessarily applies to most of the class action waivers utilized in consumer transactions because only a small percentage of consumer transactions involve sufficient potential damages that a single plaintiff, bearing the cost of attorney’s fees and expert costs, could “economically” litigate such claims. 

I would be stunned if this case is not presented to the Supreme Court.  It is of great important to a lot of powerful interests.

This new law has important implications in the context of litigation.  When an adversary demands the production of documents and other things, a company must exercise care not to produce such information in a manner that would give rise to potential liability under the law.

The two sides have operated since 1992 under an agreement allowing Airbus to receive a certain amount of "launch aid" — loans from the British, French, German and Spanish governments to finance the cost of developing new planes. But that arrangement came under strain in the past several years as Airbus passed Boeing in worldwide sales, and the Bush administration escalated the dispute by filing its WTO case in October 2004, prompting an immediate counterclaim by Brussels. Source

Both sides had hoped to avoid what’ss considered a ‘mutually destructive confrontation,’ but since billions of dollars are at stake, a peaceful and litigation-free resolution appears unlikely.

Technorati Tags: international disputes, WTO

Simply this … such agreements are seldom audited, i.e., considered and crafted in light of the circumstances to which they are meant to apply.  More often than not, neither the employer nor the employee exercises any diligence in formulating these agreements in accordance with basic legal requirements.  Employers use form agreements that they attempt to apply in varying jurisdictions to every new hire, no matter what the new hire’s position.  (I personally have reviewed prominent defense contractor non-compete agreements that were entirely unenforceable.)  On the other side, employees sign "new hire" documents without reading the contents.

So who pays the price for this lack of diligence?  Well, usually the employer — both in not being able to prevent a former employee from harming the business by competing, and in the form of significant legal expense trying to "undo and redo" a bad agreement.  For if the employer fails to sufficiently and orginally customize the restrictions set forth in a non-compete agreement, then the agreement is thereafter unenforceable.  Further, in such states as Texas, a defective non-compete agreement remains unenforceable and cannot be unilaterally fixed by the employer (by concession), but only by judicial order or agreement with the former employee, i.e., the employee is not legally bound in any way by the subject non-complete agreement until the employer devotes significant time and money to the problem. 

Believe it or not, while the above "defect and reformation" consequences seem bad enough, these can lead to other, perhaps unforeseen, problems in the hands of a knowledgeable attorney.  For example, what happens if a business has attempted to restrain 10 employees from competing but, for reasons of defective agreements, has only successfully restrained 7 of those employees?  The 7 restrained employees can make the argument that, given the harm the business will lawfully suffer from the 3 un-restrained employees, it is of no benefit to restrain the other 7 employees, i.e., since there are 3 leaks in the boat that can never be fixed, there is no point devoting resources to fixing 7 other leaks in the boat.  The boat is going to sink.  That a non-compete agreement be of real benefit to the employer is a requirement, in Texas for example.  Peat Marwick v. Haass, 818 S.W.2d 381 (Tex. 1991). 

Why endure such uncertainty when these problems can be avoided with a little advance consideration?  Audit your non-compete agreement(s), whether you are the employer or the employee.  Know your rights and obligations under the agreement.  It could benefit you down the road in ways you never imagined.

10. Contracts. Most businesses execute contracts for space, services, and supplies. Businesses often have agreements between partners, investors, and employees. It is important to get it right so you don’t end up in court.

9. Registering, Licensing, and Permits. Some business entities are required to register with the state in order to be recognized. Even businesses that are not required to register may be required to obtain licenses or permits.

8. Control. The choice of business entity likely dictates the manner in which the business is operated. Choosing the wrong entity may make you personally liable for the wrongs of employees or partners.

7. Multi-state Business. The preconditions to forming and conducting a business entity in one state may not be accepted in another state. If you are not careful, the protections you have in your home state of operations may be lost if you do business in another state.

6. Strict Conformity. With some business entities you must strictly conform to the state law governing that business form or you lose its benefits and protections.

5. Capital. Businesses need to raise money, keep records of income and distributions, and behave in a fiscally responsible manner. Different business entities may require different procedures for raising capital and making distributions.

4. Variety of Entities. Although there are five basic business entities, there are other options within these entities that determine things like double taxation and liability for the acts of partners.

3. Autonomy. With many business entities, the things you don’t decide are decided for you. Most states have adopted "Uniform Laws" that fill in the gaps for business entities where their charters, by-laws, and other organizing documents are silent. You may be subject to a whole set of laws and regulations that you don’t even know exist.

2. Tax. Different business forms provide different tax advantages and disadvantages. The only thing more crucial to a new business is liability.

1. Liability. Different business forms provide different protections and risks to the business owner/investor. Personal liability means that your business puts everything you own at risk. An attorney can help you avoid this situation or minimize your risk. Knowing about your personal liability and reducing the risk that your business may devastate the economic well-being of you and your family is worth the visit to your attorney.

[via Findlaw] 

DO know the tax and personal liability consequences of a business entity before making your choice.

DO develop a business plan. Your business plan may dictate the options you have in choosing a business form.

DO strictly meet the state requirements if your business entity is required to file organizing documents with the state.

DO ask your attorney if something doesn’t make sense. Your attorney works for you, and should help you understand every part of the business start-up process.

DON’T assume that the business entity you choose is authorized to do business in other states as well. While a sole proprietorship and general partnership may be able to do business in other states fairly freely, other business entities may not even be recognized outside of their home state. This strips away the protections that the business entity provides its owners. At a minimum, limited partnerships, limited liability companies, and corporations need to register in the states where they will conduct business.

DON’T panic. Choosing a business form can be complicated. An attorney can make sure that you choose a business entity that is right for you.

[via Findlaw]