The Inaugural Post–What Are the Greatest Risks?

Consistent with the purpose of this blog, it is appropriate that the first post list the Top Ten litigation liabilities for California businesses.

Knowing your company’s risks is the first step to avoiding senseless and costly litigation.  Based on the past several years of monitoring new case filings and defending companies in every conceivable type of lawsuit throughout the State of California, several litigation trends emerge.  Here then are the Top Ten risks that businesses engaging in commerce in the Golden State face:

(10)  Prop 65 Liability: Does the product that you manufacture and ship into the State of California contain traces of chemicals, lead or carcinogens that have been determined by the State of California to cause cancer or reproductive harm and thus require a warning label?  An explanation of Prop 65 can be found here.

(9)  ADA Accessibility Issues:  Is the wheelchair ramp at the entrance to your retail store too steep?

(8)  Employment Law including Unenforceable Covenants Not to Compete:  Are you engaging in a violation of California law by seeking to enforce a covenant not to compete? Do you also comply with the dozens of other rules design to protect employees?

(7)  Product Liability/Warranty Risks:  Does the lawnmower that you manufactured for sale in California include a warning that it is not intended for clipping hedges?

(6)  Industry Specific Statutory Regulations:  Is your line of business one that the California Legislature has considered to have a history of fraud and abuse which threatens the public welfare in the State of California such as . . . wait for it . . . dance studios?  No, I’m not making this up.  See Cal. Civ. Code Sec. 1812.50 (“The Legislature finds that there exists in connection with a substantial number of contracts for dance studio lessons and other services, sales practices, and business and financing methods which have worked a fraud, deceit, imposition, and financial hardship upon the people of this state; that existing legal remedies are inadequate to correct these abuses; that the dance studio industry has a significant impact upon the economy and well-being of this state and its local communities; and that the provisions of this title relating to these contracts are necessary for the public welfare.”)

(5) Greenwashing:  Do you market you products or services as being “eco-friendly” or “green” without an objective determination to support that claim? More on this litigation risk here.

(4)  False Advertising:  Do you make any other statements concerning your goods or services that are likely to mislead consumers?

(3)  Consumer Privacy Lawsuits:  What about all of that customer data or employee information that you have?  Are you protecting it from disclosure to third parties?

(2)  Unfair Practices Act:  Do any of your business practices violate the enumerated prohibitions under the Unfair Practices Act?

(1)  Unfair Competition Law (“Seventeen-Two-Hundred”):  Do you engage in any business practices that is “unfair”, “fraudulent” or “illegal” under any local, state or federal regulations which may give rise to a class action lawsuit?

Although this blog will address topics that do not fall under these categories, most material you will find here relates to one or more risks listed above.  If you haven’t decided to abandon the California market and restrict your business activities to the other 49 states, please read on.  I hope you will find this blog useful.

Author: Kent Schmidt

As a Partner in the Southern California office, Kent practices in virtually all types of general business litigation, with an emphasis in unfair business practices, First Amendment litigation, defamation, trade secret litigation, class actions, product liability, securities litigation and enforcement, commercial disputes, employment law, intellectual property and Prop 65 (environmental) claims. He is an aggressive and creative courtroom advocate, representing both plaintiffs and defendants. Having spent his entire legal career at Dorsey, Kent is adept at finding the right lawyers in the firm to collaborate with in order to provide the best representation for his clients.