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Entries in SCOTUS (3)

Thursday
Jun212018

Why Today's SCOTUS Decision May Impact Franchisor Royalties

Franchise & Distribution Law

 

 

by Taylor M. Vernon

818-907-3027

 

Today, in South Dakota vs. WayFair, Inc., et al.,  the United States Supreme Court (“Court”) overturned long-standing precedents that required an out-of-state Seller to have a physical presence in a state  to collect sales tax from consumers in that state.

Online Purchase Sales Tax - SCOTUS Decision

The South Dakota law (Senate Bill 106 enacted in 2016) being challenged by giant online retailers, Wayfair, Inc., Overstock.com, Inc., and Newegg, Inc. – none of which had a physical presence in South Dakota – requires out-of-state retailers to collect and remit sales tax “as if they had a physical presence in the state.”

The Court found that the South Dakota law did provide due process, commerce clause and small business safeguards because it:

  1. Applies only to sellers that, on an annual basis, deliver more than $100,000 of goods or services into the State or engage in 200 or more separate transactions for the delivery of goods or services into the State,

  2. Forecloses the retroactive application of this requirement, and

  3. Provides means for the law to be appropriately stayed until its constitutionality has been clearly established.

The Court acknowledged the new economic realities of e-commerce, that when combined with a judicially created “physical presence” rule, provided a tax shelter and an incentive to do business out-of-state, giving an unfair advantage to e-commerce over in-state retailers. The Court’s decision largely focused on the substantial nexus requirement between the out-of-state seller and the states in which they made on-line sales and found that the physical presence requirement was arbitrary in today’s digital economy.

SCOTUS’s Impact on Franchisors

While the largest economic hit will be to e-commerce giants, such as the ones that challenged the law, this case also has potentially huge implications for franchisors and franchise systems.

Franchisors may need to rethink their e-commerce platforms with regard to the granting or withholding of rights to franchisees to sell goods out of state. More importantly, this case could permit states to tax franchisors on royalties paid by their out-of-state franchisees for the use of marks and intellectual property, which could be a significant financial burden for the primary revenue stream of a franchise system.

Franchisors should begin consulting their franchise and tax attorneys on the potential implications of this decision, as well as any needed modifications to their business model and franchise agreements to account for this change in the law.

 

Taylor M. Vernon is an attorney in our Franchise and Distribution Practice Group.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
May242018

FAA and NLRA: Can't We All Just Get Along?

Lawyer for EmployersEmployment Defense

 

by Tal Burnovski Yeyni

818-907-3224

 

On Monday, the U.S. Supreme Court issued a long-awaited decision confirming the enforceability of class action waivers in employment arbitration agreements.

The background: 

As previously written, in 2016 the Ninth Circuit held that class action waivers in employment arbitration agreements were unenforceable. The decision created a circuit split with the Seventh Circuit aligning with the Ninth. The Second, Fifth and Eighth Circuits however, have been validating class action waivers. Predictably, the matter was brought before the U.S. Supreme Court to “clear the confusion.”

In essence, the employees argued the National Labor Relations Act (NLRA) – which provides employees the right to act together and unionize – invalidates class and collective action waivers in arbitration agreements.  

The Supreme Court disagreed and held the class and collective action waivers are enforceable. Among other reasons, the Supreme Court opined there was no congressional intent for the NLRA to repeal the right to arbitrate under the Federal Arbitration Act and the NLRA does not include the right to engage in class action proceedings – due to the fact that when the NLRA was adopted class action proceedings “were hardly known”.

For now, employers can include class action waivers in arbitration agreements. There are many pros and cons for arbitration that employers should consider very carefully.

California employers are further advised that not all collective proceedings can be waived, as the state does not allow waiver of PAGA claims in arbitration agreements. Also, a pending bill threatens to prohibit CA employers from making it a condition of employment that employees agree to arbitrate.

Although class action waivers are permitted, unconscionability or lack of consideration may invalidate an arbitration agreement as a whole. Therefore, employers are advised to see the advice of counsel prior to implementing arbitration agreements in the workplace.   

  

Tal Burnovski Yeyni is an attorney in our Employment Practice Group.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.
Friday
Jun262015

Supreme Court: 14th Amendment Requires Recognition of Same-Sex Marriage

Gay Marriage LawCalifornia Bar Certified Specialist, Family Law

 

 

by Vanessa Soto Nellis
818.907.3274

 

 

 

 

In 1883 the Supreme Court of the United States (SCOTUS) ruled that couples engaging in interracial sex (Pace v. Alabama) are not in violation of the Fourteenth Amendment to the United States Constitution, which was ratified just 15 years previously. Amendment XIV addressed citizenship rights and equal protections in a post-Civil War era when former slaves struggled for recognition.

In 1967 SCOTUS went a step further in Loving v. Virginia, invalidating state laws prohibiting marriages between interracial couples.

Nearly 50 years later, the Supreme Court in a 5-4 decision re Obergefell v. Hodges, invalidated 13 state's laws prohibiting same-sex marriages. SCOTUS cited Confucius: "marriage lies at the foundation of government" and Cicero, "The first bond of society is marriage; next, children; and then the family."

…history is the beginning of these cases. The re­spondents say it should be the end as well. To them, it would demean a timeless institution if the concept and lawful status of marriage were extended to two persons of the same sex. . . The petitioners acknowledge this history but contend that these cases cannot end there. Were their intent to demean the revered idea and reality of marriage, the petitioners’ claims would be of a different order. But that is neither their purpose nor their submission. . .it is the enduring importance of marriage that underlies the petitioners’ contentions.

History circles back. SCOTUS rulings for Pace, Loving and Obergefell relied heavily on the 14th Amendment which attaches a Due Process Clause, upholding the Bill of Rights, or first 10 amendments to the Constitution. In Obergefell, Justice Anthony Kennedy states that the Bill of Rights gives protections for "personal choices central to individual dignity and autonomy, including intimate choices defining personal identity and beliefs."

Further, a judicial responsibility exists, which may sometimes be guided by traditional views:

That method respects our history and learns from it without allowing the past alone to rule the present. . .The generations that wrote and ratified the Bill of Rights and the Fourteenth Amendment did not presume to know the extent of freedom in all of its dimensions, and so they entrusted to future generations a charter protecting the right of all persons to enjoy liberty as we learn its meaning.

The SCOTUS opinion for Obergefell is a landmark ruling. The respondents claimed there hasn't been enough rhetoric for the courts to make such an important decision. But the opinion announced today disagreed, listing countless referenda, debates, studies and an untold number of court cases. There have been more than 100 amici briefs ('friend of the court' filings) from businesses, labor unions, religious organizations, etc., all stating their opinions or agendas regarding same-sex marriage. There has been the Defense of Marriage Act (DOMA) defining marriage as a union between one man and one woman, and then the repeal of DOMA.

Despite the respondent's appeal to wait, the Obergefell opinion contends that the Constitution allows for asserting a fundamental right without waiting for legislative action. Therefore, the SCOTUS opinion concludes:

No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice and family…Their (plaintiffs') hope is not to be condemned to live in loneliness, excluded from one of civilization's oldest institutions…The Constitution grants them that right.

 

Vanessa Soto Nellis a California State Bar Certified Specialist in Family Law. Contact her via email: vnellis@lewitthackman.com; or by phone: 818.907.3274.

 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

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