Archive for the 'Business Law' CategoryPage 2 of 18

A Proposal of Punishments for GM

Despite “New” General Motor’s promises, the company looks exactly the same as “Old” General Motors. Federal safety regulators want to fine GM $7,000 a day for failure to respond to federal questions. GM CEO Mary Barra promised new standards and then answered every other question with “We’re still investigating.” Sen. Kelly Ayotte gave the response that most of the victim’s families had on their minds: “I don’t see this as anything but criminal.”

old GM

To be sure, GM is breaking more laws than I can count, if not in letter, than in spirit. For instance, GM’s bankruptcy actually gets around the rule that only individuals can discharge their debts in bankruptcy. All that talk about “new” GM and “old” GM is not metaphor. GM was literally divided into two companies, General Motors LLC and Motors Liquidation. The bankruptcy allowed GM to escape liability for its civil suits by dumping all the claims into Motors Liquidation, a “company” which holds all of GM’s debts, but none of GM’s assets.

Criminal prosecution of GM would be counterproductive at best. Even if the Justice Department could prove that GM officials and employees were guilty “beyond a reasonable doubt,” the only remedy would be lengthy prison sentences. For the families of the victims, that might be sufficient vindication of their loss. In many cases, punishment of the wrongdoer has to be enough. I think we can do better in this case though.

GM hired Kenneth Feinberg before the Congressional hearings. Feinberg is the attorney who set up compensation funds for 9/11 victims, BP Oil Spill victims, and the Boston Marathon Bombing victims. Hiring Feinberg was probably the smartest thing GM, old or new, has ever done. During the Congressional hearing though, CEO Barra reframed from promising victims a compensation fund.

That was the wrong move. The victims deserve a compensation fund, but they deserve more than money. GM engineers should repair the victims’ cars, free of charge, if the victims need car repairs. GM executives should help the children who lost their parents by training the children in business, accounting, or law if the children want to go into those fields. GM insiders should personally make amends to the families they have wronged.

These proposals are radical. They replace lost family members with GM employees and wrongdoers would be active participants in the lives of their victims. There is no judge in the country who would order these types of relationships. However, creating a support network for the auto accident victims would be a more moral solution than simply throwing GM employees in jail. Prosecutors have the discretion and the ability to craft a deal where GM insiders could help heal the victims they injured.

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Wearable Technologies Push Legal Frontiers

When I was a kid, I remember electric blankets were all the rage. However, after reports of these blankets causing fires, they quickly became a thing of the past. A few years ago, after Google Glass emerged, I couldn’t help but think of the electric blanket—an interesting, novel product, but with a slew of potential legal troubles that may ultimately leave owners getting burned. As it would turn out, Google Glass was merely the tip of the iceberg for the revolution of wearable technology. However, it seems as though concerns over the potential problems of these wearable technologies is entirely warranted. wearable technology

What Is Wearable Technology?

While it may seem like an obvious question, it deserves a bit of an explanation. “Wearable technology” describes clothing or accessories, such as a bracelet or glasses, which utilize computer technology that gives the wear some heightened sense of practicality. An early example of this is a calculator watch. In addition to giving the person the ability to tell time, they could calculate tips or other simple math equations on the fly.

The most talked-about wearable technology is Google Glass. You wear Google Glass just like any other set of glasses, except instead of polarization and UV protection, these glasses offer people the ability to surf the web, check the weather, read text messages, and even make photographs and record video in 720p.

“Smart watches” are also receiving an increasing amount of attention. These devices are similar to calculator watches, in the sense that they keep time in addition to other functions. Where they differ is that rather than just compute numbers (which they can still do), these watches also operate as .mp3 and FM radio players, cameras, GPS navigation systems, and even as a cell phones. Wristband devices can also monitor your heart rate, sleep quality, and how many calories you burned.

Clothing companies have even started entered the wearable technology field. What some of these “clothes”—if you can call them that—can do is astonishing. For instance, BB.Suit has designed a piece of clothing that makes the wearer a walking WiFi hotspot, Studio Roosegaarde has crafted a type of high-fashion dress that becomes ‘see-thru’ as the person’s heart rate increases, and there has even been talk of companies testing prototypes of clothes that can harness solar power.

Why Is Wearable Technology a Legal Concern?

Wearable technologies have the potential for causing serious privacy violations. For example, those equipped with an app called “Winky” could use Google Class trigger the camera mechanism with the blink of an eye. This not only raises concerns over privacy, but also sparks an interesting issue with various wiretapping laws.

Private establishments have every right to maintain some manner of control over the conduct of people entering their premises. Shortly after the first Google Glasses started popping in the San Francisco Bay Area, many establishments began posting signs that asked wearers to remove their glasses before entering due to privacy concerns of other customers. Casinos in Las Vegas have banned them outright.

Law enforcement has been having trouble regulating the use of Google Glass. In October of 2013, a San Diego woman was ticketed for wearing her glass while driving. Ultimately, the case was thrown due to a lack of evidence that the glasses were actually on and in use while the woman was behind the wheel. But the statement was already made: Don’t Google and drive. In other parts of the country, legislatures have made efforts to get the Google Glass put in the same category as a cellular phone.

Smart watches pose many of the same problems as Google Glass. If glasses are causing a ruckus by being able to send texts, access the Internet, and capture images in the wink of an eye, it is not unreasonable to see how the exact same privacy concerns arise over a watch that can do the exact same thing with the flick of a wrist. Similarly, using smart watches to text and talk while driving will force legislatures and law enforcement alike to figure out ways to control the use of these devices, many of which look like normal wrist watches.

Aside from criminal issues, there are also concerns over health and safety. “Fitbit,” who manufacture an athletic wristband, recalled one of its models after users began to complain of skin irritation. As the popularity of wearable technology grows, so will the lawsuits over design defects and harm caused by them.

The Legal Community Should Encourage Innovation

Regardless of the potential legal problems the legal community, it is exciting to see how much technology has grown in the last twenty years. If watches that double as phones and temperature regulated jackets are today’s hot item, it’s mind boggling to think of what type of gadgetry the next twenty years will bring us. When developing laws to regulate new technologies, the legal community should be careful to not impede future innovations.

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Bitcoin: What It Is and Why You Should Care

Whenever I hear the word “coin,” I can’t help but picture Scrooge McDuck diving into a swimming pool full of gold, or think of old arcades and a handful of tokens. Perhaps the creators of Bitcoin had this in mind when they named their company.

Banks Warn Of Bitcoin RisksSo, What Is Bitcoin?

These days, everything is on the Internet. In 2009, a software developer decided that money should be too. But this isn’t money in the cold hard cash sense, or even in a less tangible sense, like your credit limit. Instead, Bitcoin uses a cryptographic protocol, or a long string of numbers, to identify each piece of currency.

How Does It Work?

Traditional currency (i.e. paper money and metal coins) is circulated by governments. Bitcoin, on the other hand, does not rely on the banks or the powers that be. Bitcoins are created through “mining,” a process where computers running Bitcoin software essentially solve very complex math equations – specifically, encrypted transactions of other Bitcoin users. Once one of these “problems” is solved, it will be logged into a “block chain” which publicly records the transaction, and rewards the problem solver (or solvers) with newly minted bitcoins.

Put simply, Bitcoin is a program that enables users to use its digital currency to exchange goods, services, or whatever their heart desires. This transaction is then recorded with Bitcoin, which is added to a block sequence that can be mined to create more bitcoins. It is akin to interest or transaction fees, but without actually really being interest or transaction fees…if that makes any sense.

Think of it this way: just as paper money has a serial number, bitcoins receive a specific identifying sequence of numbers. The main difference between the two is that one is regulated by the government and banks, and the other is created almost solely by the people.

Why Should I Care?

Bitcoin has been skyrocketing in popularity. Some traditional businesses, such as coffee shops, have started taking it as payment, and there is even news of Bitcoin ATMs cropping up to allow the basic consumer to buy bitcoins at market rate with their cash.

Right, the market value. In 2011, a mere two years after their creation, the digital currency jumped from a rate of $0.30 to $32. It then slipped back down to $2, only to skyrocket in 2013 to upwards of $266. As of today, a single bitcoin is worth about $517.

Make no mistake, Bitcoin is a volatile, high risk investment (in fact, that figure jumped between 515.2 – 518.2 in the 10 seconds I took to confirm the value). But as an alternative to traditional currency, at least for now, it is certainly worth its weight in gold.

Sounds Too Good to Be True. What’s the Catch?

Back before globalization, when the seas were the gateway to the world, gold, silver, and gems were currency, along with spices and fine silks. Essentially, if someone saw value in it, it could be traded for something else of value, like food or a home. And where there was value, there were individuals seeking to exploit other people’s hard-earned livelihood.

Well, the same is true with Bitcoin, but think “Pirates of the Caribbean” only with hackers instead of Johnny Depp. This has resulted in individuals hijacking other individual’s computers processing power through trojans to mine for bitcoins.

Bitcoin has also been linked to illegal gambling or as an exchange for illicit substances via black market websites. For example, in November of 2013, the FBI seized bitcoins from a black market website that were valued at $28.5 million at the time.

The most common problem facing Bitcoin is plain and simple theft. As you’ll remember, each bitcoin is unique. Just like money that was taken from a wallet, if a bitcoin is taken from the owner’s “wallet,” that bitcoin is gone and probably cannot be traced. Most bitcoin theft occurs when a user’s private key to his online wallet is stolen from a payment processor.

Furthermore, and maybe the most worrisome, is the stability and longevity of this unregulated currency. For example, as of yesterday, February 23, 2014, the world’s largest Bitcoin trading site was taken offline. Just before the website went offline, the trading company’s CEO resigned. This type of erratic behavior of platforms where millions of cryptocurrency is changing hands makes some economists and investors wary to give Bitcoin and similar forms of currency their stamp of approval. However, others view it as typical industry evolution that will force bad companies out of the market.

The Future of Digital Currency

Forms of alternative currency are nothing new, but Bitcoin was the first of its kind, and appears to be in it for the long run. Since its inception in 2009, at least seven other cryptocurrencies have shown up onto the marketplace. While volatile and risky, this gives users the ability to choose an alternative to traditional money.

And if you really think about it, considering exchange rates, the fluctuating value of the dollar, and an unstable economy, traditional currency may not be the solid gold standard people once believed it to be.

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Uber: Tech Company of the Year Sparks Legal Controversies

Since 2009, Uber, Inc. has provided fast, affordable, and tech savvy transportation services in major cities. In 2013, Uber was recognized as tech company of the year by a writer for USA Today. However, despite its success, Uber has also sparked a number of legal controversies amongst both cab companies and Uber driver employees.

UBERappWhat Is Uber?

If you’re unfamiliar, Uber is a new cab-like company that allows users to summon cabs with the push of a button on their smart-phone. The app then enables users to tracks the ride as it approaches, rate the driver, and automatically pays for the ride with whatever credit card the user has on file.

As an extra-bonus to users, the Uber app automatically includes gratuity in the cost of the ride and drivers are not permitted to accept extra cash tips.

Why Are Cab Companies Mad?

Cab companies and taxi drivers are mad because, currently, Uber rides are not subject to the same extensive city regulations as cab companies. This saves Uber the cost of regulation compliance and allows Uber to beat out cab companies with cheaper rates.

The reason for this is “cab companies” are generally regulated by cities while “pre-arranged car services” are only subject to state regulations – which tend to be comparatively minimal.

The main distinction between the two similar services is whether or not the ride can be flagged down on the street. Here, Uber currently still qualifies as a pre-arranged car service because Uber rides can only be summoned via app.

What Regulations Apply to Uber?

In California, the Public Utilities Commission recently adopted a new set of rules for Uber that are similar to those for limousine companies.

These regulations include driver background checks, car safety checks, training programs, and zero-tolerance for drug and alcohol use by drivers. Still, these regulations don’t match up to city regulations of cab companies.

Why Are Uber Drivers Mad?

Recently, Uber also began taking heat from its own drivers. Several months ago, a class action lawsuit was filed on behalf of the drivers citing a number of complaints, including that many Uber drivers don’t enjoy employee status, and that Uber unlawfully skims Uber driver’s tips.

Here, Uber makes money by taking a percentage of the gross proceeds billed by Uber drivers. The Uber drivers are then paid the remaining amount, but are still accountable for their own gas, insurance, and car maintenance.

  • Employee Status Issue

Uber classifies many of its drivers as independent contractors rather than employees. As result, Uber saves itself many of the costs and responsibilities associated with employees, including not having to pay for employee gas, insurance, and car maintenance.

However, depending on the actual relationship between Uber and its drivers, the law may step-in and declare that the drivers are employees regardless of how Uber wishes to classify them. When determining whether a worker is an employee or independent contractor, courts will look to a number of factors regarding the autonomy of the worker from the employer.

  • Tip Skimming Issue

When Uber takes a percentage of each bill, this includes a percentage of the “gratuity” calculated into the tab. Under most state labor laws, employers are prohibited from sharing in any portion of an employee’s tips. However, this rule only applies if the gratuity actually qualifies as a customer’s “tip” to the driver.

Tips are defined as money a customer leaves for an employee over the amount due.  Here, Uber customers aren’t given any option whether or not to pay the included gratuity amount. However, Uber also specifically tells riders that gratuity is included and prohibits drivers from accepting additional cash tips.

Here, because tips are customary in the ride-industry and because Uber restricts customers from tipping outside the required gratuity, I’ll place my bets on the Uber drivers winning this argument and receiving their full share of tips.

What Does this Mean for Uber Riders?

There is certainly merit to the claims made by both cab companies and Uber drivers. However, if either group’s claims are successful, it will increase the company’s cost of operation and may lead to increased fares for Uber rides.

Still, Uber and similar companies like Lyft are paving the way for the future of public street transportation. As time progresses, the law will surely have to catch-up and figure out how best to regulate the operation of this new industry

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Make Way for Corporations at the Pews

Corporations and the Freedom to Express Religious Beliefs 

Anybody enjoy In-N-Out Burger? If you look at the bottom of an In-N-Out wrapper or drink cup, you’ll find a reference to a Biblical verse, with the name of a book and a chapter number.

Does In-N-Out have the constitutional right to put such references on the bottom of their cups? That’s somewhat of a trick question, since constitutional law only applies to government action, not private action. The real question is whether government can pass a law restricting In-N-Out’s ability to do so. There are actually two possible answers. First, the owners of the company, the Snyder Family, have the right to express religion. The second, and more relevant answer, is that In-N-Out itself has the right to freely express religion.


The distinction between owner and corporation is an important one. If In-N-Out has the right to freely express religious beliefs, then for-profit corporations have the right to express religious beliefs. Why is this important? For starters, it is the quickest way out of Obamacare’s contraceptive mandate. I’m not saying In-N-Out plans to deny its employees birth control, but other companies owned or controlled by religious Presidents or CEOs are currently pressing this exact issue in the courts.

Should Corporations Have Religious Rights?

The circuit courts are divided on the idea that corporations have religious rights, which means one of the cases is a shoe-in for Supreme Court review. The 10th Circuit endorsed corporate rights to religion, but limited the idea to “closely held family businesses” like Hobby Lobby Stores Inc. The limitation was a result of the difficulty in determining whether a corporation actually believed the religious views it was expressing. The circuit court panel could see no distinction between incorporated businesses and unincorporated businesses owned by individuals, at least with regards to free speech. From this jumping point, corporations, at least ones like Hobby Lobby, could also express religious beliefs.

The 10th Circuit might be confident it can confine the monster it has created to family held businesses, but the distinction between family held corporations and publicly owned corporations is a thin one. Family members have disagreements all the time. Disagreements between family are often more bitter than disagreements with people outside the family. It is just as difficult to determine whether each family member owning the corporation holds the same sincerely held religious belief as it is to determine whether each stockholder has the same sincerely held religious beliefs.

If corporations have religious rights, Obamacare will be the first, but not the last religious exemption granted. Tax breaks meant for churches might be used by corporations. Employment discrimination laws could be more easily bypassed. Most importantly, this opens the door to corporations obtaining other fundamental rights, such as the right to vote. Let’s just hope the courts don’t recognize a corporate Second Amendment right to bear arms.

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