Court Rules on Non-Solicitation Agreement and Social Media

stock-footage-young-woman-in-hair-salon

In Invidia LLC v. DiFonzo, a case involving a non-compete between a Belmont hair salon and its former stylist, the Middlesex Superior Court recently denied the plaintiff’s Motion for Preliminary Injunction. The Court reasoned that Invidia failed to establish that the non-compete would be found enforceable and that the salon would suffer irreparable harm. More interesting was the Court’s stance on the plaintiff’s claims that the stylist used Facebook to solicit its clients. The stylist “friended” eight of the salon’s customers and then her new employer posted on the stylist’s Facebook page that they had hired her. A client responded … Continue reading

Tory Burch: When Business Divorce Meets Real Divorce

burchwonder

Even after a marital divorce is finalized, the business divorce discord lingers, especially when both spouses are the co-founders and equal shareholders of a $2 billion fashion brand. Tory Burch, a retailer of upmarket women’s apparel, shoes, and accessories, and her ex-husband Chris Burch are embroiled in a court battle over the successful label and his own year-old fashion venture, C. Wonder.  After their divorce settlement, both remained equal shareholders of the Tory Burch brand and continued to hold their positions on its board of directors. Now Tory’s attorneys allege that Chris Burch used his access to Tory’s business information … Continue reading

Pretense versus “Legitimate Business Reasons” for Freeze Outs

Boston Business Divorce

Under Massachusetts law, Wilkes v. Springside Nursing Home, Inc., 370 Mass. 842, 849-52 (1976) established a shifting burden of proof in close corporation freeze out cases. Wilkes instructs that in a close corporation freeze out suit, the defendant carries an initial burden of showing a legitimate business reason for its actions. Courts generally grant defendants a fair amount of discretion, but once a defendant has offered his reason, plaintiff then has the opportunity to show that the reason is simply a pretense, or that the defendant’s objectives could have been achieved in a manner less detrimental to the plaintiff. If … Continue reading

Plaintiffs Satisfy Delaware Pre-Suit Demand Requirement by Rejecting Own Demand

raised_hands

In Nekoroski v. Mathai, 2012 WL 3126434 (Mass.Super. – Business Litigation Session), the directors and shareholders of OpenRisk, LLC brought suit against the former officers for, inter alia, theft of trade secrets and breach of fiduciary duty.  OpenRisk, formed under Delaware law in January 2011, is a technology company that provides a platform for insurance companies to better assess risk. The defendants, who were “service members” of the LLC until resigning a few months after joining the company, had entered into not only an Operating Agreement with the plaintiffs, but also a Service Agreement.  Defendants moved to dismiss the complaint, … Continue reading

Tricky Transfer of an LLC Interest

200 High St Boston MA

The Suffolk Superior Court recently issued a decision on a motion for judgment on the pleadings in Furman v. Gossels.[1]  The Plaintiffs, four sisters, brought suit against their aunt and uncle, Elaine Gossels and Jerome Furman, alleging various claims regarding the sisters’ claimed one-third interest in a family company. The sisters’ father, Walter Furman, had formed 200 High LLC with his siblings Elaine and Jerome.  The company owns the commercial building at 200 High Street in Boston.  In 2008, Walter and his siblings executed an operating agreement for the LLC and in 2010, Walter passed away leaving his estate (including … Continue reading

Developer Takes Assets, Pins Debt on Daughter

Recently, after an eight day trial, a Suffolk Superior court jury determined that a father was liable to his daughter for breach of fiduciary duty in commandeering the family company’s assets while pinning his daughter with all the debt.[1] In 2002, while the plaintiff/daughter was still a student at Northeastern University, the defendant/father, who had worked in real estate for most of his life, created a real estate development company with the daughter for purchasing, permitting and subdividing real estate. The father made the daughter the sole shareholder and president of the newly created entity (due to his prior credit … Continue reading

Even Success Can Breed Failure

In a recent Suffolk Superior Court decision[1], Judge Lauriat determined that defendants, majority owners of Boylston Cypress LLC (“BC”), were not liable to plaintiffs, the minority members, for breaches of fiduciary duties and contract regarding the LLC’s accounting practices.  BC was created for the sole purpose of developing the Cypress Lofts in Brookline.  It spent $20 million acquiring the property and constructing the condominiums and parking spots.  Although the project seemed to be a success by all standards, with all condo units and parking spaces being leased or sold and both parties (and the main real estate broker) making a … Continue reading

More Problems Arise for Upper Crust

Upper Crust Pizza

It’s no secret that locally based pizza chain Upper Crust has recently been under scrutiny over its labor practices; illegally employing undocumented workers from Brazil, underpaying them for long workweeks and rescinding overtime pay ordered by the U.S. Department of Labor for weekend work.  Five former employees have a suit pending against the company for these practices.  In fact, the court recently certified the class in that lawsuit. As it turns out though, Upper Crust’s problems don’t end there. In dueling pleadings filed in Suffolk Superior Court, the co-owners of Upper Crust are now suing each other alleging misuse of … Continue reading

Demoulas v. Demoulas SuperMarkets, Inc.: A Case Study in Business Ventures Going Bad

Market Basket

The Demoulas dispute started with a trusted family relationship that went bad.  Partly what made it infamous was probably a result of the parties’ wherewithal – they have been able to fund decades of litigation. As the years passed and millions in fees accrued, the animosity built. In 1917, Arthur Demoulas opened a local grocery store in Lowell.  He and his wife operated it for some 40 years and then handed it over to their sons, George and Telemachus (“Mike”).  The brothers grew the business quickly and their families were very close.  In 1964, Mike and George executed wills, stating … Continue reading

Welcome

Welcome to Boston Business Divorce, a blog by Attorney Tara Myslinski. We are located in Burlington, MA, and represent many individuals and small companies involved in shareholder disputes.  All of our clients start their businesses with the best of intentions and expectations.  All of them have involved some degree of trust in their business partners.  They come to us because their trust has faltered, or in some cases, the relationship has entirely deteriorated and they are ready to file suit.  In many cases, unfortunately, the relationship becomes pure animosity once litigation begins.

This blog is intended as a resource for those who are considering forming a small business, currently pursuing a healthy venture, or discovering differences among business partners.  We can help you with analyzing your partnership agreement, limited liability company operating agreement, or by-laws.  We are here to mediate a burgeoning dispute you have with your partners.  If you have a dispute that has already come to a head, we are experienced trial lawyers who are here to litigate your case with the intensity necessary in a business divorce.

Tell me about your small business! I am constantly looking for topics for this blog and always looking to help out small business owners.  Tell me about yours.  Are you solidly protected by your operating agreement?  Are you worried about the ownership structure or control of your company?  How have you resolved potential conflicts among your company’s owners?  What kinds of topics would you like to hear about in this blog? Click here to tell me about your business.

We are experienced in business divorce.  The earlier you seek advice, the better.  Please feel free to call us with any of your concerns, and check our blog frequently to learn about the latest in Massachusetts law on business divorce.