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Portland Business & Commercial Law Blog

Mediation helps companies avoid protracted business litigation

Mediation can play a valuable role as an alternative to bitter and protracted business litigation in Oregon and elsewhere. Mediation is less formal than arbitration and does not include an attempt to litigate the issues between the parties. Instead, mediation is a search for common elements of agreement that the parties can use to bring about a potential peaceful resolution of their differences instead of quickly resorting to business litigation. A business will want to include in-house counsel or outside business law attorneys in the process so that all rights are protected and a business solution is formalized without detriment to either party's legal position.

In modern business relations, it is often counterproductive for a company to enter into an all-out adversary confrontation with another business. The two companies may still have many things in common and many reasons to want to keep doing business together. The pre-litigation resolution of controversies in an amicable manner can sometimes even build a stronger bond between the companies and increase the channels of productive communications between them.

Business litigation portends big recovery for Vungle's co-founder

Disputes between top executives and their former companies often occur in Oregon and elsewhere. Sometimes, an individual who was instrumental in founding and creating a company is deactivated by the board of directors for improper or inadequate performance issues. This can lead to bitter business litigation regarding the right of the board to take such action against a key corporate executive.

That fact scenario is playing out in a neighboring state where a co-founder of a mobile advertising company was removed from his position as chief executive officer by the board. Zain Jaffer, a co-founder of Vungle Inc., sued his former company for terminating his employment without justification. The controversy arose in 2017 when police arrested Jaffer when he was found unconscious in his home.

Business formation and operations guided by new moral standards

There is a history of corporate scandal and misdeeds in the country, including in Oregon. When such events come to the public eye, legislative reform often follows. Witness the rash of new legislation to accompany the real estate bust in 2008. Such laws may address the activities and mandates of business formation, business operations and other categories.

Due to the crisis in morality that has been revealed within the core of many business entities, other broad changes are occurring in the corporate landscape. For example, corporate governance generally becomes more democratic and participatory as major changes manifest. With a greater reliance on the group perspective provided by today's boards of directors, there is also a growing awareness that the company has a unique corporate culture.

Business litigation regarding contract breach is resolved

Disputes between a company and a former founder are not uncommon in Oregon and other states. Founders and creators of a company do not always stay compatible with the other leaders of the company as it grows and moves forward. A recent case in another state is an example how such events can occur and be resolved after the initiation of business litigation.

Smashing Boxes, an up and coming app developer, filed a lawsuit in 2018 against one of its original founders and his new employer, Futures. The case alleged a breach of contract in several different respects. One of the claims is that Futures poached the prior Smashing Boxes officer when it was performing a services contract with Smashing Boxes. 

Business formation for startups depends on the founder's vision

In Oregon and elsewhere, a startup business is a special kind of new business enterprise that is usually marked by certain characteristics. It usually involves a venture that is technology-related and that has an exceptionally high growth expectation. It is usually based on a dream concept that is unique to its target industry and that may even intend to revolutionize the way that industry operates in some vital way or another. With respect to the legalities of business formation, a startup may be structured like any other beginning enterprise, but its founders will generally want to have a legal plan of action to establish legal structures that will someday accommodate capital growth through public offerings.

Startups may be funded by angel investors, venture capital firms and online investor vehicles. The proliferation of startup incubators and accelerators throughout the country is a positive for startups. These training sites for new business projects will fund and guide their chosen best companies through to higher levels of operation. These funding and growth stimulating mechanisms have had great success in giving a strong start to many successful startup ventures.

Band members' royalty dispute enters into business litigation

Oregon has its share of intellectual property disputes that arise in a wide variety of factual circumstances. One common area of business litigation involves disputes over royalty payments to artists, inventors and other claimants. These disputes often involve an entertainment setting where musicians, actors or writers claim that they are not getting paid their due royalties from a contractual relationship. Such claims are generally framed in terms of a breach of contract allegedly committed by the defending party.

For example, a band known as Korn recently sued a former drummer for making a claim for royalties that the band says were written off by the drummer in a contractual settlement that occurred in 2016. The band claims that it paid the drummer with a lump sum settlement at that time. The complaint alleges that the drummer nonetheless made a claim for more royalties against the company that is handling the royalty payments.

Bait-and-switch claims lead to business litigation

Customer satisfaction is often a top priority for Oregon business owners. Without being in their customers' good graces, many companies may not hope to succeed. However, even successful companies can land in hot water when their customers believe that they have been duped. In fact, those customers could file lawsuits, but business litigation could get underway.

It was recently reported that movie ticket subscription provider MoviePass has had a lawsuit filed against the company by two subscribers. The service itself reportedly states that subscribers can pay a fee and then have the ability to go see any new movie in any theater once a day. However, the subscribers involved in the lawsuit believe that the company has used deceptive tactics to swindle customers.

Business formation lawyers are important in the merger process

When a business merger takes place in Oregon between two companies there are certain procedures that are followed. The shareholders of each corporate entity will have to vote to approve the transaction. There may follow an elongated procedure of governmental approval and a lot of legal paper work well-suited to the expertise of business formation lawyers.

During an elongated merger process between two publicly-traded companies, controversy and negative or positive news can impact each company's stock value. The general procedure is shown in the coming together recently of Pandora Media and Sirius XM Holdings. Pandora's shareholders voted to approve the merger on Jan. 29 and shortly thereafter the satellite radio provider's stock went up. Various brokers upgraded the stock from neutral to buy. Sirius is expected to put in place a protective hedge against potential market changes as a result of obtaining the streaming and video capabilities of Pandora.

Contracts may allow franchisor to make sweeping changes

Franchise law in Oregon and elsewhere can result in dissension and litigation between the parties. Franchise agreements are contracts and as such are governed by contract law. The agreement provides for the use of the franchisor's brand and products by the franchisee. The franchisor usually exerts strong control over the franchisee under the contract because the franchisor wishes to maintain a systematic way of making, marketing preserving and selling its brand. 

In return for providing very specific details and instructions on how to set up and operate the business, the franchisor takes a percentage of sales revenues. The process can be enormously helpful and profitable to both parties. However, there are also some innate problems that often arise in the context of the franchise relationship.

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