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FEBRUARY 2019
 
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IN THIS ISSUE
 
California Courts Find Non-Solicitation Agreements to be Unlawful Following Edwards and Rejecting Loral
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RSVP Now: Business Law Section Networking Mixer – Thursday, February 21
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Save The Date: Free Webinar - Annual California and Delaware Law Update - April 11, 2019
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Date To Be Announced: Securities Arbitration New Developments Program
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Save The Date: 52nd Annual Securities Regulation Seminar – Friday, October 25
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Enhance Your Practice: Join the Executive Committee of the Business and Corporations Law Section
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Law Firm Memos
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The Business & Corporations Law Section eNews
is published by the Business & Corporations Law Section

Editors:
Andrew Clark
Latham & Watkins LLP
Andrew.Clark@lw.com

Alex Voxman
Latham & Watkin LLP
Alex.Voxman@lw.com


Executive Committee Officers:

Katherine Blair, Chair
Harumi Hata, Vice Chair, Membership
Roger Loomis, Vice Chair, Membership
Barry Burten, Vice Chair, Programs
Peter Menard, Vice Chair, Programs
James Coupe, Vice Chair, Treasurer and Council of Sections Liaison
Mark Hiraide, Vice Chair, Events
Scott Lochner, Vice Chair, Events and Secretary

Barristers Liaison
Sarah Kelly-Kilgore

 

 
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California Courts Find Non-Solicitation Agreements to be Unlawful Following Edwards and Rejecting Loral
 

Since 1985, California courts and practitioners have relied upon the decision in Loral Corp v. Moyes (full decision here) to support the position that employee non-solicits - i.e. agreements not to seek to hire the employee of another - are enforceable on the basis that such non-solicitation provisions did “not appear to be any more of a significant restraint on his engaging in his profession, trade or business than a restraint on solicitation of customers or on disclosure of confidential information”.  

In 2008, the California Supreme Court in Edwards v. Arthur Andersen LLP (full decision here) cast doubt upon the reasoning applied in Loral by ruling that restraints on the solicitation of customers were, in fact, prohibited by California’s Business & Professions Code Section 16600 (full text here).  However, in Edwards the California Supreme Court reserved on the question of the enforceability of employee non-solicitation provisions (as distinct from customer non-solicitation provisions).

In two recent cases, the California Court of Appeal (AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (full decision here)) and a California federal district court (Barker v. Insight Global, LLC (full decision here)) have found that the decision in Edwards caused the decision in Loral to lack “continuing viability” and, on that basis, held the relevant employee non-solicitation provisions to be unenforceable as a result of conflicting with Section 16600. While the AMN Healthcare decision may be limited in its general applicability as a result of facts specific to that case (the affected individuals were in the business of recruiting nurses), the federal district court in Barker seemed to place little importance on such facts and reached a broader conclusion, stating: “Having considered the [AMN Healthcare] decision and reviewed Loral and Edwards, the Court is convinced by the reasoning in [AMN Healthcare] that California law is properly interpreted post-Edwards to invalidate employee non-solicitation provisions”.

These two lower court decisions have cast further doubt as to the long standing position taken by practitioners, relying on Loral, that employee non-solicitation provisions are enforceable in California. While awaiting the greater certainty that will be provided by a decision by the California Supreme Court and/or more widespread appellate acceptance of the decisions in AMN Healthcare or Barker, company counsel and outside counsel alike should carefully consider their, or their client’s, enforcement of (or threats of enforcement of) employee non-solicitation provisions.

 
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RSVP Now: Business Law Section Networking Mixer – Thursday, February 21
 

Join LACBA and MSK as we celebrate the combining of the Business and Corporations Law Section and the Corporate Law Departments Section into the new Business Law Section.  The evening will be an informal/"get acquainted" mixer and membership recruiting outreach event for business and corporate attorneys, and law students.

The reception will be held in the Harbor Room of downtown L.A.’s City Club. Registration from 5.30 PM and reception from 6.30 PM.

To RSVP for the event, please click here.

 
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Save The Date: Free Webinar - Annual California and Delaware Law Update - April 11, 2019
 

Save the date for one of our most popular webinars -  The Annual California and Delaware Law Update, to be held on Thursday, April 11, 2019 starting at noon.

Join the experts for this free webinar as they analyze recent California and Delaware law changes and highlight differences and commonalities between the two. The panelists are Michael Allen, Partner at Richards Layton & Finger, a top-tier ranked Delaware law firm, and Keith Bishop, Partner at Allen Matkins and former California Commissioner of Corporations.

 
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Date To Be Announced: Securities Arbitration New Developments Program
 
Securities Arbitration New Developments: Everyone’s Perspective, co-sponsored by the Business Law Section and FINRA is expected to be held from 12.00 to 1.15 pm in April. The program will present perspectives from a claimant, regulator, arbitrator, respondent and mediator. Laura D. McNamire, Esq., FINRA Regional Director, will provide the regulator’s perspective and Robert C. Rosen, Program Chair, will moderate the panel.
 
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Save The Date: 52nd Annual Securities Regulation Seminar – Friday, October 25
 
The 52nd Annual Securities Regulation Seminar which is sponsored by LACBA’s Business Law Section and the Securities and Exchange Commission, and co-sponsored by the California Department of Business Oversight and FINRA, will be held on Friday, October 25, 2019. Please save the date.
 
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Enhance Your Practice
 
Join the Executive Committee of the Business and Corporations Law Section

The Executive Committee of the Business and Corporations Law Section is seeking new members. Membership on the Executive Committee is a terrific forum to network with your fellow corporate law practitioners across the city. Membership on the committee affords unique opportunities to participate in the creation of law in your practice area, to get to know and be known by other practitioners, to work with the recognized leaders in your field, and to stay on the cutting edge of developments and practice techniques.

For further information on the Section, click here.

If you are interested, please contact hhata@buchalter.com.
 
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Law Firm Memos
 

Developments in California Law

California Court of Appeal Enforces Delaware Forum Selection Bylaw
Sheppard, Mullin, Richter & Hampton LLP

Federal Court Blocks Shareholder Inspection Of Delaware Corporation's Records Pursuant To California Statute
Allen Matkins Leck Gamble Mallory & Natsis LLP

Ward v. Tilly’s, Inc.: California Employers Should Dial Back On-Call Shift Policies
Sheppard, Mullin, Richter & Hampton LLP

 

M&A

Good Faith, Fair Dealing, and Exit Provisions
Harvard Law School Forum on Corporate Governance and Financial Regulation

 

Securities Laws

SEC Issues New Guidance on Diversity Disclosure Requirements
Sheppard, Mullin, Richter & Hampton LLP

10 Tips for 10-Ks and Proxy Statements
Harvard Law School Forum on Corporate Governance and Financial Regulation

Desktop Reference: Form 8-K Filing Events
Latham & Watkins LLP

Tenth Circuit Affirms Ruling Allowing SEC to Bring Securities Fraud Claims Over Certain Foreign Transactions
Cleary Gottlieb Steen & Hamilton LLP

 

General

Is The Wait Over? Proposed Changes To FLSA Overtime Exemption Regulations May Arrive As Early As March
Lewis Brisbois Bisgaard & Smith LLP

 

 

Readers are advised that changes in the law may affect the accuracy of this publication or the functionality of links after the publication date.
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