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Archive for March, 2018

Business Law Update: When Can a Business Sue Another Business over its Corporate Status?

March 29, 2018 Leave a comment

I (like much of West Michigan) am headed out the office and on vacation for my kids’ Spring Break. But before I go I wanted to share an interesting business law case that came out a few days ago.

2016-01-09 12.56.14

Check out the March 27, 2018  case:

Michigan Radiology Society v OMIC, LLC et al

The first sentence of the opinion sums up the dispute:

This case arises from plaintiff’s effort to prevent defendants from continuing the
operation of their business.

 

 

 

 

Facts:

 

  • Plaintiff is a non-profit corp. Its owners are radiologists licensed to practice medicine in Michigan.
  • Defendant OMIC, LLC,  is a for-profit LLC.
  • OMIC  provides diagnostic imaging to the public and is solely owned and managed by defendant SusanSwider.
  • Defendant Susan Swider is not a licensed physician.
  • Plaintiff sued, claiming that defendants were in violation of:
    • the Michigan Limited Liability Company Act (LLCA)
    • the Business Corporation Act (BCA),  and
    • the Public Health Code (PHC)

 

Plaintiff sued asking for declaratory and injunctive relief.

Basically, Plaintiff claimed “You can’t do that! You need to be properly licensed!”

The case was dismissed by the Trial Court.

A reasonable question to ask is: Why?  

 

Why was the case dismissed by the Trial Court?

Answer: Plaintiff was not a proper party to enforce a claimed violation under the statutes.

Plaintiff did not have “standing”.

 

Who has Standing to Bring a Claim?

The Court of Appeals cited the long standing law of our constitution:

Our constitution requires that a plaintiff possess standing before a court
can exercise jurisdiction over that plaintiff’s claim. This constitutional standing
doctrine is longstanding and stems from the separation of powers in our
constitution. Because the constitution limits the judiciary to the exercise of
“judicial power,” Const 1963, art 6, § 1, the Legislature encroaches on the
separation of powers when it attempts to grant standing to litigants who do not
meet constitutional standing requirements.” Id page 3.

 

So in this case, Plaintiff sued Defendants saying they violated 3 statutes. The question presented was, did the Plaintiff have standing to sue Defendants under those statutes?

“Statutory standing…necessitates an inquiry into whether a statute
authorizes a plaintiff to sue at all.” Id. Page 3.

Basically, the Court held that the statutes above that the Plaintiff sued under (LLCA, BCA PHC), only allowed the Attorney General to sue to enforce a violation.

“[T]he Attorney General alone has the authority to challenge corporate status.” Id. Page 3,  citing  Miller v Allstate Ins Co, 481 Mich 601, 606-608; 751 NW2d 463 (2008)

 

Lesson:

If you are a business and believe another business is operating “illegally” it doesn’t mean you are the proper party to sue them.

Think about this another way: You are business and know of a business that is gouging a client of yours – does that give you the right to sue that business? Do you have standing to sue that business.

Something you should talk with your lawyer about…

For all of those traveling on Spring Break – safe travels!

 

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

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Calling the Next Generation of Leaders.

March 22, 2018 Leave a comment

Good morning and Happy Thursday! It is a beautiful morning in downtown Grand Rapids!

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Yesterday was the annual meeting of the Trustees of Mel Trotter Ministries. It was one year ago that my term ended as Board Chair.

Last year I shared my reflections on this experience.

One of my great joys during this time was seeing the launch of Mel Trotter Ministries 2020 Strategic Plan.  Check it out to see some exciting things we see in the near future for MTM.

 

 

Detroit Nonprofit Day

Today,  I was reading about an upcoming event called Detroit Non-Profit Day

This is a one day conference on Saturday April 14th devoted to preparing non-profits for financial and sustainable growth.

Social entrepreneurs and those in the non-profit community should consider this workshop. You can sign up here.

Reflecting on Detroit NonProfit Day and  my experience at Mel Trotter as well as serving other nonprofits, got me thinking on nonprofit sustainability and prompted me to write this post.

This is an issue that all non-profits need to address:

how are non-profits going to stay viable in the future?

 

However, the issue I wanted to address in this post is sustainability in leadership.

 

My Call to Next Generation Leaders. We Need You.

I can appreciate the anxieties that many service-minded folks can experience when faced with volunteer/board service. Particularly the next generation/millennials.

Many feel inadequate and inexperienced.

I had a conversation recently with a friend – we serve on a committee together where the rest of the people around the table are successful influencers and leaders in the business community. My friend made the comment to me that “one of these things is not like the other.” He was pointing out the obvious – we, in both our minds,  stuck out like a sore thumb because our relative young age.

Simply put, when you are younger and sitting around a table full of gray-haired folks who have achieved much more than you, it is easy to let insecurity or doubt slip in.

This insecurity can be a road block for many in putting themselves out there for service.

If that’s you – here’s my call to you:

What you are experiencing is normal.

But get over it.

Fight through the temptation to be passive. Be bold and reach out to the organization that fits your passions.

Don’t do it for yourself – do it for the cause that you care about.

Because whether the organization acknowledges it or not – they need you.

They need your perspective, and they need you to get involved to gain experience and develop institutional knowledge in how their nonprofit works.

You only learn the strengths and the gaps of an organization by spending time in that organization in active service.

 

Here’s a selfish plug for Mel Trotter Ministries – interested in learning more about ways to serve or connect with the leadership? Join me for lunch.

At Mel Trotter Ministries, we are always looking for volunteers. We need people who have a heart for the hungry, homeless and hurting in West Michigan.  As we seek to end homelessness in West Michigan, one life at a time, it is a large task and we cannot do it alone.

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This is my call to everyone, but particularly our next generation of leaders – millennials and beyond.

Ask yourself:

 

How can I serve?

 

 

 

Millennials – I’m reminded of the Bible – 1 Timothy 4:12 –

Don’t let anyone look down on you because you are young, but set an example for the believers

The fact remains – the millennial and younger generations are our future leaders.

Now is the perfect time to get plugged into one of the many opportunities to serve and lead.

Please take this as your personal invitation from me –

Take the initiative.

Get engaged.

Just show up.

 

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

Business Law Update: Michigan Bill Would Prohibit Non-Disparagement Clauses with Consumers.

I’m not going to sugar coat it – it is a gray day in downtown Grand Rapids.

I had lunch with a friend today, who told me – he can’t stand it when in response to the question “how are you doing” someone gives a pat answer – “good”.

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I agree.

I appreciate authenticity.

And today, is gray, and somewhat depressing and I am a little down.

Yesterday, I attended the funeral of a friend and fellow attorney who died suddenly. I am grieving and in prayer for Adam’s family, including his wife, two small children and his brother and parents.

 

 

 

Ok, enough authenticity, and on to the subject matter of this post…

 

I previously wrote about an interesting article published by the ABAJournal.

The article presents interesting questions that come up in business transactions:

when faced with entering a business relationship should you enter into a non-disclosure agreement? (NDA)

What about if the NDA contains a Non-Disparagement Clause?

What is Disparagement?

Michigan courts have held that “disparagement” is plain in its meaning. It is not ambiguous. Therefore, when signing a non-disparagement clause you can have some reasonable certainty in your conduct.

Disparage – as you will see below – has a fairly common meaning

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‘Disparagement’ is ‘a false and injurious statement that discredits or detracts from the reputation of another’s property, product, or business.’ Black’s Law Dictionary (7th ed. 1999).

stated another way:

(1) To speak of in a slighting or disrespectful way; belittle.

(2) To reduce esteem or rank.’ . . . American Heritage Dictionary (4th Ed. 2000)

 

Non-Disparagement Clauses in Contracts with Consumers

 

Recently the Federal government passed a law holding that such non-disparagement provisions in contracts are unenforceable under Federal law

California has had such a law in place since 2016.

 

It is one thing if two sophisticated business parties are negotiating a business relationship, but should consumers have specific protections concerning Non-Disparagement Clauses?

 

At least one Michigan lawmaker thinks so.

Michigan House Bill 5193

On October 31, 2017, HB 5193 was introduced to amend the Michigan Consumer Protection Act (“MCPA”).

“The MCPA provides protection to Michigan’s consumers by prohibiting various methods, acts, and practices in trade or commerce.” Slobin v. Henry Ford Health Care, 469 Mich. 211, 215; 666 NW2d 632 (2003).

The Amendment would prohibit anyone engaged in Trade or Commerce from including in a contract with a consumer for the sale of lease or sale of consumer goods:

“A PROVISION THAT WAIVES THE CONSUMER’S RIGHT TO MAKE A STATEMENT CONCERNING ANY OF THE
FOLLOWING:
(i) THE SELLER OR LESSOR.
(ii) EMPLOYEES OR AGENTS OF THE SELLER OR LESSOR.
(iii) THE CONSUMER GOODS OR SERVICES.

(B) THREATEN OR SEEK ENFORCEMENT OF A CONTRACT PROVISION PROHIBITED UNDER SUBDIVISION (A).

(C) PENALIZE A CONSUMER FOR MAKING ANY STATEMENT PROTECTED UNDER SUBDIVISION (A).

 

Of note, under this Bill businesses would still be permitted to include provisions that protect its proprietary information.

 

I understand the intent of this provision. However, it hasn’t made any progress in committee. I will keep you posted on any development.

 

 

Questions?  Comments?

e-mail: Jeshua@dwlawpc.com

www.dwlawpc.com

Twitter: @JeshuaTLauka