Washington State Investigating Use of No-Poaching Provisions in Franchise Agreements

The State of Washington has started issuing Civil Investigative Demands (“CIDs”), requiring franchisors to provide information on their use of no-poaching provisions in Franchise Agreements. By the end of this year, if not sooner, all franchisors offering franchises in Washington, or having franchisees in Washington, should expect to receive a CID.

Does Your Square Peg Not Fit into a Round Hole? Consider the Discretionary Exemption

Compliance with state franchise registration and disclosure laws can be expensive and time consuming. As such, putative franchisors and fran­chisors alike often seek to identify an exemption or exclusion from the applicable law in hopes of being able to avoid the registration and disclosure provisions of the law. Unfortunately, sometimes the proposed franchisor or franchise transaction does not fit into a typical exemption, or the state lacks an applicable exemption. But one exemption, often trailing at or near the bottom of a state’s list of exemptions—and often overlooked—is the so-called “discretionary exemption,” an exemption in the public interest, or exemption by order or rule.

Recent Litigation Developments: Arbitration, No-Poaching, and Post-Term Non-Competes

We noticed a few interesting cases this summer regarding the dismissal of no-poaching claims, the enforceability of arbitration agreements, and post-term covenants not to compete.

SCOTUS: Objectively Reasonable Standard Applies to Discharge Violations

In Taggart v. Lorenzen, 139 S. Ct. 1795 (2019), the Supreme Court established the threshold for determining whether a creditor can be held in contempt for violating a bankruptcy discharge as whether the creditor had an objectively reasonable basis for concluding that its actions were lawful.

Exactly Who is Insured Under Your Insurance Policy?

“Exactly Who is Insured Under Your Insurance Policy?” Larkin Hoffman Real Estate and Construction Blog, August 21, 2019

Decline in Value of Cash Collateral Subordinates DIP Loan Lien Rights

In Welty v. Callidus Capital Corp. (In re Midwest Asphalt), Adv. No. 18-04022 (Bankr. D. Minn. Mar. 29, 2019), the bankruptcy court held that the plaintiff successfully preserved his debtor-in-possession loan lien rights in assets sold in an 11 U.S.C. § 363 sale. However, the court found that the debtor’s cash collateral declined in value enough that the plaintiffs’ lien rights were subordinate to those of the secured creditor and purchaser of those assets.The defendant had a pre-petition security interest in various assets, including the debtor’s cash collateral (cash, inventory, and accounts receivable).

Minnesota Court of Appeals Confirms Actual Use, Not Historical Use, is What Matters for Legal Nonconforming Property

Uses of commercial property change over time. As commercial landowners well know, the right to use property as one wishes is subject to and limited by municipalities’ police power in regulating land use. One way Minnesota municipalities regulate permitted uses of land is through zoning. Provided it is exercised lawfully, municipalities generally have the authority to modify land use through changing zoning definitions and rezoning parcels altogether. When this occurs, a use which was previously a permitted use for a parcel can become an unpermitted use for the same parcel.

Inverse Condemnation Can be a Powerful Property Owner Remedy For Damage or Destruction of Property Value by Governmental or Utility Company Actions

Inverse condemnation can be thought of as condemnation in reverse. In a condemnation proceeding, the acquiring authority exercises its power of eminent domain by first offering to purchase private property needed for a public purpose; if no meeting of the minds can be reached with the property owner, then the acquiring authority has the power to take the property through condemnation proceedings in court that determine the “just compensation” to be paid to the property owner for the private property rights that were taken.

The United States Supreme Court's Decision in Obduskey v. McCarthy May Change Debt Collection Requirements For Minnesota Mechanic's Lien Notices

Lawyers who record mechanic’s liens cannot afford to ignore the Fair Debt Collection Practices Act (“FDCPA,” or “Act”). It may only impact an occasional part of an attorney’s lien practice, but the FDCPA is all the more dangerous for not being top of mind. FDCPA lawsuits can be expensive and corrosive to client relationships. In particular, the Act provides for the recovery of attorneys’ fees for plaintiffs. (15 U.S.C. §1692k(a),(d).)

E-Alert Minnesota Employers Must Comply With New Wage Theft and Employee Notice Laws by July 1, 2019

Minnesota employers must comply with the new wage theft and employee notice laws by July 1, 2019.

Insurability of Punitive Damages in Minnesota

“Insurability of Punitive Damages in Minnesota,” Insurance Law Deskbook, Chapter 9 (Minnesota CLE, 2019)

E-Alert - Minnesota Enacts New Wage Theft Laws and Employee Notice Requirements

The Minnesota legislature passed sweeping new amendments to statutes which create criminal penalties for the failure to pay wages and impose requirements for employers to document the terms of employment with their employees.

Lessor Beware

Bryan Huntington’s article, “Lessor Beware” was published in the May 2019 edition of Bench and Bar magazine. The article examines the trend that recent federal court decisions seem to favor a willingness to hold commercial landlords liable for their tenants’ trademark infringement.

It Cannot Be Hearsay if You Said It: Statements of Brokers as Representations of the Insurer in Minnesota

“It Cannot Be Hearsay if You Said It: Statements of Brokers as Representations of the Insurer in Minnesota,” Survey of Insurance Law, TIPS LAW JOURNAL, Vol. 52, 2019.

FTC Seeks Comments on Amended Franchise Rule

The Federal Trade Commission has requested public comments on whether to make changes to its rule known as “Disclosure Requirements and Prohibitions Concerning Franchising” (“Amended Franchise Rule) as a part of systematic review of all current FTC rules and guides. Comments must be received on or before May 13, 2019.

U.S. Supreme Court Resolves Split over “Wholly Groundless” Exception to Arbitration

Earlier this year, the U.S. Supreme Court in Henry Schein, Inc. v. Archer & White Sales, Inc., unanimously struck down the “wholly groundless” exception that had been invented by lower courts to defeat arbitration agreement clauses that delegate threshold questions of arbitrability to arbitrators. This is good news for franchisors who rely on arbitration as the franchise system’s chosen method of dispute resolution. The decision is the latest evidence of the law’s continued trend favoring the enforcement of arbitration agreements.

8th Circuit Affirms Shareholder-Standing Dismissal and Implied Consent to Entry of Final Order

A Transfer is Not Fraudulent If Only a Non-Filing Spouse’s Interest in Joint Property is Involved

A Transfer is Not Fraudulent If Only a Non-Filing Spouse’s Interest in Joint Property is Involved

In Seaver v. Noll, Adv. No. 17-4066, 2018 WL 4693813 (Bankr. D. Minn. Sept. 27, 2018), the bankruptcy court held that transfers “executed to prevent the defendant’s property from being caught up in the debtor’s bankruptcy case” were neither constructively nor actually fraudulent. The Court also analyzed each transaction to determine that, except for one miscalculation, the transfers were not otherwise voidable.

Anti-Poaching Clauses Continue to Draw Focus of State Regulators and Plaintiffs’ Lawyers

On December 20th, the Washington State Attorney General announced that it had reached agreements with another 7 franchisers to eliminate anti-poaching clauses from their franchise agreements, joining 39 others who signed similar agreements with the state earlier in the year.