Archive for August, 2007

Class-Action Lawsuits Can They Help You

Friday, August 31st, 2007

The recent withdrawals of the prescription medications Vioxx and Bextra from the marketplace due to safety concerns has class-action lawsuits in the news again. What is a class-action lawsuit? If you have been wronged, can a class-action lawsuit help you?

A class-action lawsuit is one in which a single law firm or attorney represents a group of individuals who have been wronged in some common way. The wrong may have come in the form of physical harm from a commercial product or perhaps in the form of financial harm done by a company misleading the public in some way. In the early 1990′s, class-action lawsuits were filed on behalf of women allegedly harmed by silicone breast implants, and now attorneys are filing class-action suits on behalf of people allegedly harmed through the use of Vioxx and Bextra.

There are advantages and disadvantages to class-action suits. The primary advantage is that they allow a group of people, perhaps numbering in the thousands, an opportunity to have their case heard in court without each of them having to file a separate lawsuit. If thousands, or even tens of thousands, of people filed individual lawsuits against the same company for the same reason, the courts, both at the Federal and state levels, could become hopelessly clogged with nearly identical cases. Another advantage is that it allows people who may not have individually suffered enough harm to justify a lawsuit by themselves to seek compensation as a group, or “class” where the harm committed is cumulatively large.

The courts decide whether or not a case is to be heard as a class-action suit, as the court must decide if the merits of the case justify handling the suit in that way, and whether or not the attorney or law firm in question can adequately represent the victims involved. Should the case proceed as a class-action suit, only one or two representatives of the class need appear in court. They will represent the class; it is not necessary for all members of the class to be present at trial.

Once the case is certified as a class-action lawsuit, all parties representing the “class” are notified by their attorney either via mail or public notice. They then have the opportunity to “opt out”, should they not wish to be represented in the case by the attorneys in question. Unless the notified individuals opt out, they are included and will share in the award, should the lawsuit proceed to a successful conclusion. Individuals who choose to opt out may then elect to hire their own representation and perhaps file a lawsuit on their own.

Class action lawsuits typically take several years to reach their conclusion, particularly if the suit is followed by appeals by the losing party. It is not uncommon, however, for class action lawsuits to be settled out of court.

As always, should you find yourself in a situation where a lawsuit might be warranted, be sure to consult with a qualified attorney.

©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including

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Database Hacks – Are Banks Required To Notify You

Thursday, August 30th, 2007

Ever wonder if banks are required to tell customers when
their systems are hacked? You may be shocked to learn that
they are not. The only exception to this standard has been
database hacks that effect California residents. Companies
doing business in California are required to give such
notice under the California Security Breach Information Act.
The situation is changing quickly on the federal level.

Regulations have been issued by federal finance agencies
that now force banks to tell customers when their personal
data has been exposed to unauthorized third parties. The
regulations are issued pursuant to the Gramm-Leach-Bliley
Act, which contains language requiring financial
institutions to prevent unauthorized access and use of
consumer information.

The new regulations appear to be a reaction to several
recent high-profile data leaks. They include incidents such
as Bank of America losing data tapes containing information
for over 1 million government employees and the breach of
databases for LexisNexis and ChoicePoint. It is well known
that numerous other banks have also been hacked over the
years, but the information has been hushed up.

The new regulations require financial institutions to notify
account holders if the institution becomes aware of
unauthorized access to sensitive customer information. The
directives apply to banks and savings and loan companies,
but not credit unions.

There are two serious loopholes in the regulations. First, a
financial institution that discovers a database breach must
only notify account holders if it is “reasonably possible”
that personal details will be misused. Second, the
regulations only apply to personal data, not business or
commercial accounts.

While these new regulations are a positive step, one could
drive a truck through the two loopholes. Determining whether
it is “reasonably possible” that your information will be
misused is a vague standard that many financial institutions
will use to withhold information. Put bluntly, the
notification regulations are gutless.

The best method for keeping an eye on database breaches is
to look for stories in the news. Under California law,
companies are required to give notice to California
residents when breaches occur. If you see a story about your
bank giving notice of a hack to California residents, your
personal information may have also been exposed. Hackers do
not restrict their attacks to California residents.

Richard Chapo is an attorney with – a law firm
providing legal advice to California businesses. This
article is for general education purposes and does not
address every facet of the subject matter. Nothing in this
article creates an attorney-client relationship.

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Copyright What Can You Protect

Tuesday, August 28th, 2007

The legal protection known has “copyright” has come front and center over the past few years with major legal rulings regarding peer-to-peer networks on the Internet. Copyright protection, however, can be a confusing area of the law. This article details what can and cannot be protected by copyright.

Copyright Protection? – Yes

Copyright protects “original works of authorship” in a tangible, fixed form of expression. The material does need to be directly perceptible as long as it can be expressed with the aid of technology. A good example of this is a movie, which requires a projection device of some sort.

Materials that can be copyrighted include:

1. Literary works;

2. Musical works, including any accompanying words

3. Dramatic works, including any accompanying music

4. Pantomimes and choreographic works

5. Pictorial, graphic, and sculptural works

6. Motion pictures and other audiovisual works

7. Sound recordings

8. Architectural works

Each of these categories is traditionally given a very broad reading. For instance, “literary works” include computer programs and plans for building a home are considered “pictorial, graphic, and sculptural works.” While copyright cuts a broad path, it doesn’t cover everything.

Protected by Copyright? – No

If a work is not tangible, copyright protection will not apply. This can lead to confusion, so here are a few categories not eligible for protection from copyright:

1. Works that are not fixed. For example, the statements made by experts at a round table discussion or a comedian’s stage act.

2. Titles, names, short phrases, and slogans. These materials may be eligible for patent protection.

3. Ideas, procedures and methods.

Copyright protection is a valuable intellectual property tool. If it all possible, copyright the material you produce to prevent others from misusing it.

Richard Chapo is with – providing legal services to businesses in San Diego.

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S Corporations Filing The Election

Monday, August 27th, 2007

Getting a corporation designated as an “S” can be a bit confusing. If you are committed to getting an “S” corporation, here is how you do it.

“S” Corporation

The “S” in S corporation refers primarily to a tax designation. While electing to be an S corporation does have legal implications, such as no more than 75 shareholders, the designation really concerns pass through tax issues. Put in layman’s terms, the designation simply means the corporation will “pass through” its taxes to shareholder in proportion to their ownership interests. This allows shareholders to claim profits and losses directly on their taxes and avoid the double taxation of a C corporation.

To become an S corporation, you must file an election with the IRS. Typically, no documentation is require to be filed with any state entity, but make sure to check you particular jurisdiction. Regardless, the filing with the IRS is made using form “2553 – Election by a Small Business Corporation.”

To fill out form 2553, you will need to supply the following information:

1. The name and address of the corporation,

2. The tax year to be covered by the election,

3. The date the corporation first had shareholders or began doing business,

4. The name, address and social security number of EACH shareholder, and

5. The signature of EACH shareholder.

If you have shareholders located around the country, making an “S” election filing can be problematic. Getting everyone to sign off on the document can take time and time is not on your side.

Time Requirements

The IRS puts strict deadlines on filing “S” elections. In technical terms, the election must be filed before the 15th day of the third month of the tax year for which you are electing the status. Ah, the IRS is so poetic.

In laymen’s terms, you should file the election within 75 days of the incorporation. From a practical point of view, I suggest you get the election signed and filed as absolutely soon as possible. You should also file the election through registered mail so you have a little proof if the IRS claims a late filing.

I don’t know why, but the IRS gets cranky when it comes to S elections. If you follow the above steps and get the filing in as soon as possible, you should be okay.

Richard Chapo is with – providing legal services to San Diego businesses.

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The Business of Identity Theft

Sunday, August 26th, 2007

Q: I use PayPal to accept credit cards for my online collectibles business. I recently received an email that my PayPal account was going to expire in five days if I didn’t click a link in the email and give them my PayPal account information. Being naturally paranoid I decided not to give this information and I’m happy to say that my PayPal account did not expire. Was this a scam?
– Brenda A.

A: Be thankful that your paranoia kicked in, Brenda, because you were about to fall victim to the scam of the week, this one aimed at the 35 million merchants and individuals who use as their online payment processor.

The email you received was not from PayPal, but from an Internet bad guy behind a forged email address using the domain. You should understand that no reputable online company will ever ask you to provide your account information. Think about it. They already have this information. Why would they ask you to provide it.

Since I use PayPal for several of my online ventures, I, too, received the email in question. The email first seeks to instill fear in you by saying that your PayPal account will be closed if you do not provide personal information. You are then directed to open an attached executable file and enter your PayPal account information and other personal information that PayPal doesn’t even require, including your social security number, checking and savings account information, driver’s license number, and other personal information that can be used to clean out your PayPal account and perhaps even steal your identity.

If you’re not familiar with PayPal, it is a hugely successful, web-based company (purchased by eBay in 2002) that many online retailers and eBay sellers use to accept electronic payments for everything from newsletter subscriptions to consulting services to just about any product for sale on eBay.

The allure of PayPal is that it does not require the seller to have a bank merchant account through which to process credit cards. Anyone with a verifiable email address and bank account can use PayPal and the service can be implemented almost immediately after registering.

When someone places an order on a website that uses PayPal for online payments, that customer is directed to to complete the payment process using a credit card or electronic check. The merchant can transfer the money collected in his PayPal account to his checking account any time he likes. Since many larger merchants make this transfer just once a week or so, their PayPal accounts are ripe for the picking from those who have the cunning and lack of ethics required to gain access.

The shear number of PayPal customers is one reason it has become a popular target of scam artists trying to steal personal information from individuals and businesses alike.

Identify theft is on the rise. Thanks to the Internet stealing someone’s identity has never been easier. At any given moment, there are any number of Internet thieves using all manner of high tech wizardry to steal personal and business information from unsuspecting souls, and many times they can gain access to this information simply by asking the person to provide it through fraudulent means.

The PayPal scam is just the latest in a long line of sophisticated attempts to steal personal information through online means, Amazon, eBay, Dell Computer, and many others have been the brunt of many such scams in recent years.

Identity theft is what’s known as a knowledge crime, which means that the criminal doesn’t have to break into your house to rob you blind. If you have a bank account and a social security number, you are susceptible to identity theft.

While most people are familiar with identity theft, most business men and women never think about it happening to them, at least on a professional level. Consider this: if a criminal can learn your business checking account number or the number of your company credit card, they can steal far more from your business than if they had simply knocked down the door and carted off your desk.

The Internet aside, most business and personal identity theft is still the result of stolen wallets and dumpster diving. You should guard your business records closely and be very careful what you throw away. Stop and think for a moment what a criminal might find in the dumpster behind your office.

There’s a good chance that dumpster has, at various times, contained scraps of paper with your social security number, driver’s license number, credit card number, old ATM cards, telephone calling cards, and other pieces of vital business information like bank statements, invoices, and purchase orders. A dumpster-diving thief could literally rob your business blind in a matter of hours.

Here are a few ways to protect yourself from business and personal identity theft.

* Never give out your first name, last name, business name, email address, account passwords, credit card numbers, bank account information, PIN number, social security number, or driver’s license number.

* Change your online account passwords every 30 days. Believe it or not, a hacker who steals your personal information can guess your online account passwords in about two minutes. If your Charles Schwab online account password is your birthday or the name of your first born or family pet, count on a hacker cracking that code faster than you can say ‘Bill Gates.’

* Never provide personal information in response to an email or telephone call. Just because someone calls and says they are from Dunn & Bradstreet and need to confirm your business information does not mean they are really from Dunn & Bradstreet.

* Never give your business credit card number over the phone to place an order with someone who has called you unsolicited. If you are interested in what they are selling get their number, check out their company, then call them back to place the order.

If you think that you have become the victim of identity theft or think someone is trying to steal your identity or personal information you should report them immediately to the Federal Trade Commission. You will find more information on their website at For more information on what to do if identity theft happens to you visit

So, if you ever receive an email from PayPal, Amazon, eBay, or any other ecommerce website asking you to update your account information by email you can pretty much bet the farm that it is a scam.

In business, as in life, a little paranoia is a good thing.

Small Business Q&A is written by veteran entrepreneur
and syndicated columnist, Tim Knox.
Tim’s latest books include “Small Business Success Secrets”
and “The 30 Day Blueprint For Success!”
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Protect Your Business With Non-Disclosure Agreements

Saturday, August 25th, 2007

Every business should protect proprietary information when
dealing with independent contractors, vendors and other
businesses. The best way to do this is to use a
non-disclosure agreement, often referred to as an “NDA.”

What is an NDA?

An NDA is an agreement between two parties to protect
confidential information disclosed in a business
transaction. The proprietary information can include
business methods, finances, client lists, and anything that
isn’t already readily available in the public arena. If a
party subsequently breaches the NDA, the injured party can
sue for damages, an injunction against further disclosure
and attorney’s fees.

Directional NDA

In many situations, only one party requires the protection
provided by an NDA. If you invent a new product, you are
going to need an NDA from manufacturers, distributors, etc.,
before you discuss the product with them. While this may
seem like common sense, most businesses fail to carry the
thought through to their daily activities.

Practically every business hires independent contractors,
but they rarely obtain NDAs prior to disclosing information
to the contractors. For example, do you use third parties to
create or maintain your websites? Did you obtain NDAs from
any of them? If not, what’s to keep that party from using
your business methods on other sites? A directional NDA can
keep this from occurring.

Mutual NDA

As the name suggest, a mutual NDA allows two parties to
protect confidential information. The mutual NDA is
typically used when two businesses are negotiating a joint
venture. Each party must disclose enough information to make
the negotiations viable, but neither wants that information
made public if the negotiations fail. If negotiations go
well, additional non-disclosure information will be
incorporated into the joint venture agreement to protect
additional information revealed during the joint venture.

Refusing to Sign an NDA

Alarms and warning lights should go off if a party refuses
to sign your NDA. Unless they can provide a very compelling
reason for the refusal, you should walk away from the
business relationship.

When An NDA isn’t really an NDA

Just because a document is titled, “Non-Disclosure
Agreement”, does not mean it provides you with protection.
You should ALWAYS read the language of an NDA because the
document may establish that you are WAIVING all
confidentiality rights. The waiver might be very direct and
read something like, “The disclosure of information pursuant
to this Agreement shall not be considered confidential.”
Alternatively, the language may be more indirect and read,
“The parties acknowledge and agree that all information
exchanged pursuant to this agreement has previously been
established in public forums.” Regardless, the “reverse
NDAs” strip you of protection and should not be signed.

Obtaining non-disclosure agreements should be a standard
practice for your business. Don’t exposure your proprietary
business secrets to others without this protection.

Richard Chapo is the lead attorney for the law firm – a firm providing
legal advice to California businesses. This article is for
general education purposes and does not address every facet
of the subject matter. Nothing in this article creates an
attorney-client relationship.

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Legal Matters – Power of Attorney

Friday, August 24th, 2007
Tip! Most medical malpractice cases legal nurse consultants consult on involve significant economic damages, such as medical expenses and lost earning capacity. These high-dollar cases will continue to keeplegal nurse consultants busy.

A person can issue a letter to another person authorizing him to act in business or legal matters on his behalf and this is called a letter of attorney, or power of attorney in common law. The person who is issuing the power of attorney is known as principal and the person who acts on behalf of the principal is known as attorney-in-fact or agent. The attorney-in-fact is authorized to sign documents in the name of the principal.

When a person is incapacitated because of some ailment and could not sign a cheque, that person can request another person to do so through oral instructions. Institutions such as banks, hospitals, IRS in the US insist on a power of attorney in writing to honour the instructions and they normally take up the original letter with them for their records.

Tip! Determine if there is chemistry. In addition to legal expertise and a track record in your area of need, you will need to form a good working relationship with your counsel.

The signature of the principal in a power of attorney should be notarized to get a legal status similar to the case of signatures in any deed in normal circumstances which are notarized. This process is known as “equal dignity rule”. For more info visit

The scope of the power of attorney can be defined in the letter itself. It can be a limited power of attorney to carry out specific acts or it can be a broad or general power of attorney to carry out any and all acts on behalf of the principal. A court will interpret the scope of power of attorney, exactly as described in the letter. A time limit can be set to a power of attorney.

Legal Forms, Contracts And Agreements. Largest Provider Of Personal/Business Forms & Contracts On All Subjects. See Forms Related To Your Website.

Upon the death of the principal, the power of attorney becomes invalid. It also becomes invalid when the principal becomes incapacitated due to mental illness or physical injury unless a provision is made in the original power of attorney specifically exempting such provisions.
This type of “durable power of attorney” or “living will” enables the agent to make decisions regarding the health care of the principal in case it is needed.

In a “springing power of attorney”, the power granted becomes valid only when specific acts described in the letter takes place – such as illness, which incapacitates the principal – in the future. Due to the privacy legislation in US, doctors will not provide medical history or related information regarding the capacity of the principal unless specific authorisation is given in the power of attorney.

The principal of a power of attorney can revoke the powers granted by informing the attorney-in-fact that it is revoked.

A template for various kinds of power of attorney with standardized forms are available for use and various organizations also provide the same to their customers, patients, clients, members or employees.

Lucy Bartlett is a proud contributing author. Find more articles here. For more info visit Lawsuit Resource or Power of Attorney

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