Category Archives: Business

Florida legislature updates its LLC Act

The Florida legislature updated its LLC Act, the provisions of which become effective January 1, 2014. Anyone with ownership interests in an LLC is a “member” of the entity. The decision-maker (in the colloquial sense) is called the “manager.” LLCs formerly consisted of three types: manag_ing_-member, manager-managed, and member-managed. The Revised Act eliminated manag_ing_-member LLCs. Unless stated otherwise an LLCs is “member-managed.”

The Florida legislature also attempts to assure transparency among members of an LLC. For example, a member may not “unreasonably restrict” the LLC from maintaining or another member from accessing certain business records. Further, a member may not alter the required member materials or change specific duties in the winding up process. See Fla. Stat. §605.04091 for manager and member duties.

Leaving the LLC and The Liability That Follows

The updated Act grants all members the authority to leave an LLC (known as “dissolution”) by way of the LLC’s operating agreement (Fla. Stat. §605.0602) or what is now known as “wrongful” dissolution See Fla. Stat. §§ 605.0601; 605.0602. However, if a member causes a wrongful dissolution, that member may be liable to both the LLC and its members.” Fla. Stat. §§ 605.0105(3)(i); 605.0601(3).

The Act provides for Statements of Authority, which may give the public notice about who can enter in contracts on behalf of the LLC (“bind”). See Fla. Stat. §605.0302)

Indemnify and Reimbursement

If a member or manager is sued while acting in his/her capacity at the LLC then the LLC may pay the attorney fees. However, the indemnified must repay the LLC if the court finds him/her not entitled to indemnification. See Fla. Stat. § 605.0408. However, the LLC may neither reimburse nor indemnify a member or manager that acted in bad faith or violation of law, received undue distributions, or acted outside his/her capacity of the LLC (See Fla. Stat. § 605.0105(3)(q)). The Florida Revised LLC laws are comparable but do not mirror RULLCA.

Dino Perakis is a Florida Coastal School of Law student anticipating graduation May 2014, current law clerk for US Dist. Court of the Middle Dist. of Florida, Jacksonville, Florida , Judge Monte C. Richardson.

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Foreign Tort Claims Against Corporations Limited By The US Supreme Court.

By William Fife, Florida Coastal School of Law graduate, Indiana University MA – International Relations. Adopted in the first Judiciary Act of 1789, the Alien Tort Statute (ATS) is nearly as old as the American Republic itself.  Although the ATS was included in this bedrock of American judicial power, the ATS has rarely been used […]

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Investors Lose Claim For Misleading Registration Statements Against Omnicare

By Contributor Joshua Goldsborough, graduate of Florida Coastal School of Law, after working with Well Fargo Financial, and was an intern for the Florida Chief Financial Officer.

The issue is whether Defendants, Omnicare, Incorporated, its officers, and directors, made material misstatements and/or omissions to Plaintiff investors. The investors bought Omnicare securities in connection with a December 2005 public stock offering.

Relief may be sought under § 11 of the Securities Act of 1933, which provides a remedy for investors who have acquired securities under a registration statement that was materially misleading or omitted material information. Furthermore, it imposes liability on issuers and signers of registration statements containing untrue statements or omissions of material fact.

Here, Plaintiffs allege that Omnicare’s Registration Statement stated that Omnicare’s therapeutic interchanges were meant to provide patients with more efficacious and/or safer drugs than those presently being prescribed and that its contracts with drug companies were “legally and economically valid arrangements that bring value to the healthcare system and patients that we serve.” Plaintiffs argue that these representations were material, untrue and misleading because they effectively concealed Omnicare’s illegal activities from its investors.

Omnicare argues that liability only exists to the extent that the statement was both objectively false and disbelieved by the defendant at the time it was expressed. Furthermore, Omnicare argues that Plaintiff’s failed to state a claim and moved to dismiss the complaint because Plaintiff’s did not adequately plead any allegations that Omnicare knew that the legal compliance statements were false when made.

The court held that the plaintiffs had not adequately pleaded knowledge of wrongdoing.

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Raymond James Arbitration Claims by Investors Barred by the Statute of Limitations in Florida.

The Supreme Court of Florida examined a case certified by a lower court as an issue of great public importance held that Florida’s statute of limitations applies to an arbitration proceeding because it is within the statutory term “civil action or proceeding” under section 95.011 of Florida statutes. This case involved a mandatory provision for clients of Raymond James Financial Services, Inc. to arbitrate all disputes arising from their investments.  A group of investors claimed that the statute only applies to judicial actions, not contractual arbitration clauses, and thus claims could be brought against Raymond James beyond the statutory deadlines.  The Supreme Court reversed the 2nd District Court of Appeals, reasoning that the statutory terms “action” or “proceeding” was intended by the Florida legislature to include an adjudication by an arbitrator since the parties are engaged in a legal process to resolve a dispute. Additionally, the Court stated that if the legislature had intended to limit proceedings to only judicial actions, it would have so declared. The statute did not include that limitation, so the Court refused to add that limitation.  See the Supreme Court opinion, Case No. SC11-2513 (May 16, 2013).

Contributor: Roger M. Groves, Professor of Law, Director of Business Law Program

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Publicly Traded Companies Can Use Social Media to Disclose Material, Non Public Information

By contributor Brittney Trigg: Florida Coastal School of Law JD and business law certificate candidate 2014, law clerk for Law Offices of Xavier Saunders, P.A.

Publicly traded companies can now use social media as a way to disclose material, non public information, and be in compliance with Regulation FD.  The company must give investors proper notice of the site that the company will use to disclose that information. Regulation FD and Section 13(a) of the Exchange Act prohibit public companies or persons acting on their behalf, from selectively disclosing material non-public information to certain securities professionals, or shareholders where it is reasonably forseeable that they will trade on that information, before it is made available to the general public. Regulation FD protects against insider trading.

A publicly traded company must disclose all material information to the public, and for purposes of complying with Regulation FD, a company makes public disclosure when it distributes information “through a recognized channel of distribution.” Instead of disclosure through the usual press release or a Form 8-K, companies can now use channels such as Facebook, Twitter, or other social media websites. The SEC recently launched an investigation of Netflix, Inc. because the company’s CEO, Reed Hastings posted on his personal Facebook page an announcement that Netflix had streamed 1 billion hours of content in the month of June. Neither Netflix, Inc. nor Hastings had previously used Facebook to disclose information. Nor had they informed shareholders that Facebook would be used to disclose information about Netflix.

The post was not accompanied by a press release or a securities filing (Form 8-K). But Hastings claims that his personal Facebook page is readily available to the public, especially because he has over 200,000 followers, and the post was picked up on several blogs and news posts. After the investigation, the SEC liberalized its policy and said that Facebook and other social media websites were in fact a “recognized channel of distribution.”

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Antenna Company Threatens Traditional Broadcast Rights and Revenue.

By Contributor Roger M. Groves, Professor of Law and Director of the Business Law Program at Florida Coastal School of Law.

A small startup company, Aereo, provides a method of streaming broadcast TV through a browser. It provides a DVR in a cloud storage system by micro-version TV antennas, thereby rebroadcasting programming content found in the public airwaves.  Aero has recently been sued by a contingent of broadcasters, including Fox, Univision, and PBS and a majority of the media outlets in New York City. The claim is that Aereo infringes of their copyrights. The broadcasters seek an injunction to immediately stop Aereo’s activities and attendant monetary damages.

The economic crux of the dispute is that Aereo provides this service for only $12 a month. This allegedly threatens the substantial license fees and advertising revenue the broadcasters generate from cable companies.  To view the complaint in this case see the link: http://docs.justia.com/cases/federal/district-courts/new-york/nysdce/1:2012cv01540/392820/1/

 

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