Articles Posted in Corporate Compliance

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Attorneys Jordan and Moses formed a two-member partnership in 2003 for an indefinite term and in 2006, Jordan communicated to Moses that he was contemplating ending the relationship, and later that month, stated that he was doing so. At issue was whether the Court of Appeals applied the proper legal analysis to the claim of wrongful dissolution of a partnership. Given that the Court of Appeals cited the disapproved language regarding "new prosperity" under Wilensky v. Blalock, it was unclear whether that court considered the evidence as indicative solely of Jordan's state of mind at the time he decided to dissolve the partnership, with a coincident intent to deprive Moses of some unidentified prospective business opportunity of the partnership, or whether the Court of Appeals considered the above evidence as showing that Jordan intended, through the dissolution, to retain a fee that was misappropriated from partnership funds. Accordingly, the court reversed the judgment of the Court of Appeals and remanded the case to that court for further proceedings. View "Jordan v. Moses" on Justia Law

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SES is a company that makes and supplies outer components or "skins" for grocery store refrigeration units. SES was formed in 2009 when its immediate predecessor, SER, was foreclosed by its bank. SES subsequently sued appellants, employees of SER, for injunctive relief under the Georgia Trade Secrets Act (GTSA), OCGA 10-1-760 et seq. Appellants then appealed, contending that the trial court erred when it found SES had standing to sue and when it granted equitable relief after finding that the preemption clause of the GTSA was inapplicable. The court held that, based upon the unique facts of the case, the trial court did not err when it declined to deny SES's action for lack of standing. The court found, however, that the trial court manifestly abused its discretion when it granted equitable relief to SES because the trial court's reliance on Owens v. Ink Wizard Tattoos was erroneous and the GTSA superseded all conflicting laws providing restitution or civil remedies for the misappropriation of trade secrets. Accordingly, the trial court's award of equitable relief pursuant to OCGA 9-5-1 was a manifest abuse of discretion and must be reversed. View "Robins, et al. v. Supermarket Equipment Sales, LLC; Smith v. Supermarket Equipment Sales" on Justia Law

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Sterling, a limited liability corporation engaged in the business of importing and selling Iraqi currency, hired Grossi, a company that specialized in web-based marketing strategies, in an effort to create an internet-based sales platform. After the parties' dispute over the modification of a compensation scheme by which Grossi was paid, Sterling filed suit against Grossi seeking a temporary restraining order, interlocutory and permanent injunctions, and damages. Grossi subsequently appealed the grant of interlocutory injunction in favor of Sterling, contending that the trial court erred by entering an interlocutory injunction that failed to preserve the status quo. The court found that the trial court did not abuse its discretion by entering the injunction in light of Grossi's threats to do harm to the website. The court also rejected Grossi's contention that the interlocutory order was, in reality, a mandatory, permanent injunction affecting the rights of the parties. Accordingly, the judgment was affirmed.

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Dr. Carol Walker, a physician who sold nutritional supplements, filed a damage suit in the State Court of Gwinnet County against AmeriSciences and three of the company's corporate officers (appellants) under the Fair Business Act (FBPA), OCGA 10-1-399(b), for failure to disclose and comply with the repurchase requirements of the Sale of Business Opportunities Act (SBOA), OCGA 10-1-415(d)(1). On appeal, appellants contended that the Court of Appeals erred in failing to give res judicata effect to an earlier Texas declaratory judgment. The court held that Dr. Walker was barred by the Texas judgment from filing an FBPA claim against AmeriSciences in Georgia and a Georgia court could not make its own determination regarding whether the forum selection clause precluded the filing of an FBPA claim in Georgia. Also at issue was whether the State Court of Gwinnett County had personal jurisdiction over the individual defendants. The court held that because the "fiduciary shield" doctrine did not apply in Georgia, the allegations of the complaint were sufficient to withstand appellants' attack on the trial court's jurisdiction over the individual defendants on the ground that they acted in their corporate capacities. Appellants further contended that, even if the trial court had personal jurisdiction over the individual defendants, they could not be personally liable for violations of the SBOA because none of them was a "seller" within the meaning of OCGA 10-1-410(10). The court held that pursuant to OCGA 10-1-399(a) and 10-1-417(b), each individual defendant was subject to personal liability for any violation of the SBOA which he had committed and which was proved by Dr. Walker.

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Cobb Electric Membership Corporation ("Cobb EMC") members filed a derivative action against Cobb EMC and the parties subsequently entered into a settlement agreement. At issue was whether the Court of Appeals erred by failing to defer to the trial court's determination that Cobb EMC's Board of Directors ("Board") was authorized to adopt the proxy voting bylaw agreement. Also at issue was whether the Court of Appeals erred in holding that the use of the proxy voting pursuant to the Board's bylaw amendment violated the provision of the settlement agreement. The court held that although the Court of Appeals mischaracterized the nature of the issue on appeal, it did utilize the correct standard for reviewing the trial court's legal conclusions, i.e., de novo review. The court also held that while it agreed with the conclusion that the Board's proxy voting bylaw amendment violated the terms of the settlement agreement, the Court of Appeal's reasoning was not the basis upon which the court's conclusion rested. The court held, nevertheless, that the Board's proxy voting bylaw amendment violated the trial court order approving the settlement agreement because it significantly changed the conditions under the parties' agreed-upon plan for proposing the option of proxy voting. The court finally held that, because the trial court's May 2009 order did not address the "full cooperation" requirement of its previous order, the Court of Appeals erred in considering the issue. Accordingly, the judgment was affirmed in part and reversed in part.