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Yearly Archives: 2012

Tebow’s Name Ignites War Between Nike and Reebok

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March 30, 2012  |  IP Updates  |   David Baker

According to Homer, Helen of Troy’s beauty was so great that it led to her abduction by Greek warrior Paris which then sparked a backlash from the other Greek states and the whole Trojan War thing. Now, thousands of years after the Greeks used the Trojan Horse ruse to sack Troy and recover Helen, Tim Tebow’s larger-than-life personality and name have sparked a similar war between the titans of professional posts apparel, Nike and Reebok.

For anyone who doesn’t follow the NFL or American professional football, Tim Tebow is the wannabe wunderkind who played quarterback for national-title winning Florida University before gaining even more notoriety playing the same position for the NFL’s Denver Broncos. Tebow is outspoken in crediting his creator (God, not his parents) for his (ahem) “talent” and he has had very brief, checkered playing time in the NFL marked by very erratic performances. Loved by some, hated by others, and fascinating to many, Tebow was traded from the Broncos to the New York Jets when veteran quarterback Peyton Manning unexpectedly found himself on the market and agreed to a multi-million dollar deal with Denver.

So, how did this lead to war between Nike and Reebok? Well, Reebok has been the official provider of team uniforms and sports apparel to the NFL for many years, but the NFL recently negotiated a new contract with rival Nike that was set to go into effect April 1, thereby bumping Reebok from very lucrative sales. Not to be outdone, Reebok took advantage of the timing and released Jets jerseys emblazoned with Tebow’s name after the trade was announced and before the Nike-NFL contract went into effect.

Nike was not amused and so, last week, Nike, Inc. filed a lawsuit against Reebok International Ltd. (a subsidiary of the Adidas Group) alleging that Reebok used Tebow’s name on Jets apparel without express permission from Nike or Tebow’s consent. Of course, the lawsuit seeks unspecified monetary damages and states that demand for Tebow Jets gear was abnormally high during the short sales window before Nike took over. It also alleges that the unauthorized Reebok jerseys will compromise the sale of authorized Nike jerseys in the future.

While it’s doubtful any cities will be razed or that Tebow will carried back to Denver on a chariot, it should be an interesting case to watch unfold.

Trial Court Victory

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March 21, 2012  |  News and Events  |   Robert Coldren

Earlier this month, a Hart, King & Coldren client received good news!  A five-day trial concerning a claim of a party seeking specific performance for the purchase of a mobile home park was decided in favor of Hart, King & Coldren’s client.

Our client, a park owner, owned one of his parks subject to a long term ground lease in favor of the park operator/plaintiff.  Our client had been sued by the park operator, claiming it had a right to purchase the mobilehome park for approximately $2.5 million pursuant to an option agreement.  The property is worth at least $8.0 million.

Hart, King & Coldren demonstrated that the position of the plaintiff was at odds with the intent and understanding of the signatories to the long term lease that contained the option to purchase.  The court voided the demanded $2.5 million sale and released HKC’s client from any obligation to sell the park to the plaintiff for $2.5 million, saving the ground lessor (our client) at least $5.5 million dollars.

Congratulations to our client its client for this hard fought victory and to my partner, trial attorney Bill Dahlin, and the rest of the Hart, King & Coldren staff for a job well done.

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The Death of Redevelopment Agencies

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March 12, 2012  |  Blog  |   Bill Dahlin

As almost any tax paying person in California is well aware, the state has been embroiled in budgetary woes for many years.  The current Governor, Jerry Brown, sought to find a new revenue source to address the ongoing deficits.  Governor Brown turned to the Redevelopment Agencies that exist within almost every City and County within the State of California.  A proposal was made whereby some of the tax funds received by the Redevelopment Agencies would be contributed to the State for use in paying its general obligations.  The Redevelopment Agencies reacted with a universal “no way” and a political and legal battle was joined.

The Governor, in conjunction with the overwhelming Democratic majority within the State Legislature, adopted two (2) pieces of legislation.  The first piece of legislation literally disbanded every Redevelopment Agency within the State.  The second piece of legislation offered what the Brown Administration believed was an olive branch.  Specifically, it offered the Redevelopment Agencies the ability to continue to exist and pursue various projects provided they would share a portion of their revenue with the State. 

The Redevelopment Agencies again reacted with a uniform “no way” and filed suit.  On December 29, 2011 the California Supreme Court issued its opinion in the matter entitled California Redevelopment Association  v. Matosantos, the Director of the State’s Finance Department.  The litigation filed by the Redevelopment Agencies asserted that the disbanding of the Redevelopment Agencies was illegal and that the demand for payment of a portion of their proceeds was similarly unconstitutional. 

In a closely watched opinion, the California Supreme Court, in a six to one decision, reached two (2) conclusions.  First, the California Supreme Court ruled that the legislation disbanding all Redevelopment Agencies was valid and constitutional.  The majority’s reasoning was simple:  the legislature had the authority and exercised that authority to create Redevelopment Agencies and gave them the authority to undertake their “redevelopment” activities.  The Court reasoned that the very ability to create such agencies necessarily included the ability to simply reverse course and disband such agencies.  In simple terms, what the legislature has provided, the legislature can take away.

Thus, the California Supreme Court concluded that the legislature had every legal authority needed to simply disband Redevelopment Agencies and compel such agencies to go about the process of orderly winding up their business.  That ruling became effective February 1, 2012.  In the months following, we will observe how the various redevelopment projects are moved forward to liquidation and completion.  The legal and economic ramifications of the disbanding of the Redevelopment Agencies is still unknown.  The impact upon how cities and counties react to future development plans and requests, with the disbanding of such agencies, will be an issue to be closely watched in the coming months and years.  This author would certainly submit that many municipalities that utilized Redevelopment Agencies in an aggressive fashion to control how and when certain parcels were developed will now need to make decisions based upon what the private sector can and will support.

The California Supreme Court also addressed the issue raised by the Redevelopment Agencies that the companion legislation demanding that the Agencies “share” a portion of their proceeds, in order to exist, was unconstitutional.  Ironically, the California Supreme Court ruled in favor of the Agencies and concluded that the demands of the legislature to extract money from the Agencies were invalid.  Thus, while the Redevelopment Agencies prevailed as to the claim that the legislature could not take a portion of their funds, which the Agencies asserted were theirs in perpetuity, they, in reality, won a battle but lost the war. 

This office represents many developers, builders and property owners throughout the state.  We will certainly keep our clients advised as to the “real world” ramifications of the disbanding of local Redevelopment Agencies.

New ADA Rules: Ready or not, here they come!

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February 24, 2012  |  Blog  |   Chris Elliott

The New ADA Rules Become Mandatory.

The new Americans with Disabilities Act (or “ADA”) rules become mandatory March 15, 2012. This is the first revision of the ADA rules in over 20 years. The new ADA rules adopt the 2010 ADA Standards for Accessible Design which have been retooled to be more “user-friendly” in order to clarify numerous ADA issues which have arisen over the last two decades. Many were confused last year when these same rules went into effect on a voluntary basis on March 15, 2011. Effective this March 15, they become mandatory.

Expect New Lawsuits in California.

Under Federal ADA laws, an ADA plaintiff generally is entitled to injunctive relief requiring the correction of an accessibility issue. If the accessibility issue is corrected, any Federal claims filed in court will be dismissed. However, under equivalent California laws, an ADA plaintiff can recover penalties and attorneys’ fees even if the accessibility issues are corrected and the Federal claims have been dismissed. This has complicated ADA compliance and enforcement in California.

For example, in 2009, the California Supreme Court ruled in Munson v. Del Taco 46 Cal. 4th 661 that there is no distinction between a $1,000 “non-intentional” violation and a $4,000 “intentional” violation. As a result, many of our clients have seen a significant increase in ADA lawsuits because an ADA plaintiff in California is now entitled to a $4,000 penalty for any violation. Coupled with the new ADA rules, there is the potential for a slew of new lawsuits by “full-time” ADA plaintiff’s who essentially earn a living from this process.

What Can You Do?

The obvious answer is to comply with the ADA Rules. One often overlooked option is to have your property inspected by a “certified access specialist” pursuant to California Civil Code sections 55.51 et.seq. Once your property has been “CAS inspected”, you will have certain rights, including the right to an initial stay of any ADA litigation and an early evaluation or settlement conference. While you may not be able to completely prevent an ADA lawsuit, this process may deter ADA plaintiffs or may allow you to settle the action early with minimal attorneys’ fees. Of course, should you have a more complicated situation, you should always consult legal counsel well versed in this area of the law.

HKC Defeats Class Certification by Park Residents

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February 22, 2012  |  News and Events  |   Russ Harmon

In January, the Fourth District of the California Court of Appeal upheld the trial court’s ruling that the residents of a Huntington Beach mobilehome park did not meet the legal requirements to bring a class action for a myriad of alleged violations against the current and prior owners of the park.

The plaintiffs sought damages resulting from the growth of mushrooms, standing water, insomnia, falls, backed up plumbing, soft spots in the floor and even “extreme rhinitis” experienced by a household dog. Faced with such disparate claims, the Court of Appeal concluded that the Superior Court had correctly denied the residents’ request that the claims be tried in a class action. The plaintiffs then filed their unsuccessful appeal.

The Court of Appeal upheld the arguments made by HKC at the trial court level that the individual plaintiffs bringing the lawsuit lacked the requisite elements of a community of interest, numerosity and a commonality of claims. The Court further found that common issues of fact did not predominate over individual claims of property damage, personal injury and emotional distress, adding that there was no likelihood that the Court or the parties would substantially benefit from proceeding with the case as a class action.

In California, class certification is governed by the Code of Civil Procedure, Section 382 which provides, in part, ‘[W]hen the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court, one or many may sue…for the benefit of all.’ (See, Arenas v. El Torito Restaurants, Inc. (2010) 183 Cal. App. 4th, 723, 731.

The Court of Appeal followed Fireside Bank v. Superior Court (2007) 40 Cal. 4th 1069, 1089, which held that “Class certification requires proof (1) of a sufficiently numerous, ascertainable class, (2) of a well-defined community of interest, and (3) that certification will provide substantial benefits to litigants and the courts, i.e., that proceeding as a class is superior to other methods. …In turn, the ‘community of interest requirement embodies three factors: (1) predominant questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.”

The result for the HKC client is that instead of facing a class action that could have included potentially hundreds of residents with a wide-ranging array of claims, the park owners now can defend against the specific claims of a handful of individual plaintiffs.

Congratulations to HKC’s Robert Coldren, James Morse and Rhonda Mehlman for the victory at the trial court and the affirmation by the Court of Appeal.

Final Victory in Chula Vista

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January 27, 2012  |  News and Events  |   Russ Harmon

Brentwood Mobilehome Park has achieved final victory and success in pursuing its Rent Increase Application before the City of Chula Vista. On January 19, 2012, the City’s Rent Review Commission adopted a new resolution, upon remand from the San Diego County Superior Court, approving a permanent $78.00 per month per space rent increase.

The rent increase that had previously been granted, and challenged in Court, was for $45.00 per month spread over three (3) years. Brentwood contended, rightfully so, that the increase was less than 50% of what had been requested and the actions of the City’s Rent Review Commission were arbitrary and capricious. The San Diego Superior Court agreed with Brentwood and judgment was entered in favor of the park. A writ of administrative mandamus was issued compelling the City to rehear the rent increase application and provide a rent increase that was in compliance with the evidence provided at the hearing.

The Application of Brentwood was officially submitted in January 2010. Thus, over the course of two (2) years, Brentwood has expended significant time, money and attorneys’ fees seeking a reasonable rent increase. The Resolution adopted on January 19, 2012 finally accomplishes that goal. Ironically, the Rent Increase Application may well be the last discretionary Rent Increase Application that will be presented to the City’s Rent Review Commission. In 2011, the City of Chula Vista, in one of its more rational moments, amended its rent control Ordinance to provide for full vacancy decontrol. In simple terms, each time there is a change in tenancy at any mobilehome park within the City, the park owner is permitted to adjust the rent at that space to market. This author is unaware of any park owner throughout California that would not utilize that ability to adjust rents in the park on a gradual basis as tenants come and go. Because most mobilehome parks have a turnover rate of 8-10 percent per year, most parks should be able to adjust rents over time in a fashion that allows net operating income to keep pace with inflation, increases in costs and provide a reasonable rate of return. The ability to adjust rents to market on turnover is, ordinarily, a sufficient disincentive for park owners to undertake the tremendous amount of time and expense needed to pursue a Rent Increase Application.

Congratulations Brentwood on your success!! The park’s tenants are dramatically better off since the improvements were made to the park. The capital invested to upgrade the park was the basis of the Rent Increase Application. A renewed clubhouse, an entirely new and upgraded/reinforced utility system and improved amenities throughout the park are dramatic evidence of how efficient park operators keep up their park which are, of course, dependant upon reasonable revenue streams.

C. William Dahlin handled the Rent Increase Application and subsequent litigation which was finally concluded in January 2012.

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Avoiding the End of Times
Protecting Your Intellectual Property Before a Key Employee Leaves

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January 17, 2012  |  Blog  |   David Baker

Intellectual property (or “IP”) is the lifeblood of most businesses and the departure of a key employee, on good terms or bad, can stress even the best IP protection protocols. Key employees often have unlimited access to confidential company information and trade secrets, including client and prospect lists, parts and pricing lists, business protocols and procedures, and other proprietary information.  Ideally, preparation for the departure of key employees should begin long before they leave.

1. Listen! When an employee expresses dissatisfaction with his job, listen carefully.  Employees who are unhappy at work often will talk to co-workers and sometimes even upper management about their plans for the future.  Often times, these comments take the form of seemingly simple griping but other times there are nuggets of truth which reveal actual plans which may include the possibility of opening a competing business. 

2. Know your IP.  The first step in protecting IP is to know IP exists and what is most important to your business.  Any organization that does not know what information is most important to it cannot construct or implement proper safeguards. 

3. Implement reasonable security measures. Some of the most obvious preventive measures can be the most effective.  Locks on doors, encrypted passwords on computers and limited handling of confidential hardcopies are easy, cost-effective steps to take to protect the integrity of IP.  A good IT professional can establish and enforce protocols that will monitor the use of information, routinely store and back up information, and limit any destructive intent by a departing employee.

4. Don’t be fooled by ethical obligations.  Most industries follow ethical standards to protect sensitive client information such as credit card numbers, the identity of minors, etc.  However, those standards offer no protection to the unwary business and sometimes as even the most trusted employees succumb to temptations.

5. Know exactly what information your employees can access.  Even at the highest management level, someone must know what everyone in the organization can access through computers and other data collection systems.  This simple information allows management to control that access and evaluate attacks against its integrity.

6. Document as much as possible.  It is relatively unusual for a disgruntled employee to destroy or take vast quantities of sensitive data or information. However, there are almost always behaviors that begin to appear when an employee is expecting to leave. These signs should be documented and reported to management so that they can take appropriate action quickly.

7. At termination, lock down all access.  While obvious, it is important to change passwords and keys to locks, as well as seek the return of cell phones, laptops, pass cards, and parking permits, etc.  Cancellation of all memberships in industry organizations should be done as soon as possible. Soon-to-be former employees should not be allowed access to computer systems or hard copies of files.

8. Damage control.  Following termination, it is important to contact clients to inform them about the transition and to make it as seamless and painless as possible.  Revisions to the company website, updates to profiles such as LinkedIn or Facebook, and press releases to local and industry publications should also be considered. 

There is no magic wand to wave to prevent a key employee from abusing their access to IP.  However, a business with proper checks and balances can minimize any detrimental effect from the departure of a key employee.  The end of an employment relationship does not have to be the “end of times.”

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