Does An Independent Contractor Owe a Fiduciary Duty to The Company?

SEOmoz | Beware Pay-Per-Performance Agreements: SEM Sues Pop Phenomena 'The Secret' for Unpaid Share of Web Revenue

In November 2007 I blogged about a wacky lawsuit involving the movie/book/TV phenomena called "The Secret" and an SEO, Dan Hollings. Several months have gone by and both parties have been busy.

I've written before about the dangers involved in commissions-based or pay-per-performance contracts. ... There is tremendous potential for gain, but also tremendous risk. If you decide to take the plunge, make certain you have a solid written and signed contract. ....

There haven't been any rulings in the case yet about whether Hollings owed a duty of loyalty to The Secret by virtue of his relationship with the company. Generally, an SEO/M probably isn't an agent or fiduciary of his or her client. However, it is possible for an SEO/M to become an agent with special duties of loyalty depending on the nature of the relationship and the agreement between the parties.

To avoid unintentionally having a duty of loyalty to a client, expressly state in your contracts that you are an independent contractor, not the client's fiduciary or agent. Clarifying your relationship with clients helps them understand that you can work with their competitors and have no legal obligation to further their interests to the exclusion of others.

Technorati Tags: fiduciary duty, independent contractor

eBay Sues Craig's List on Minority Shareholder Claims

San Jose, Calif -- April 22, 2008 — In order to safeguard its four-year financial investment in craigslist, eBay (Nasdaq: EBAY; ) today filed a lawsuit in the Court of Chancery of the State of Delaware challenging recent transactions implemented by craigslist's board of directors, consisting of Craig Newmark and Jim Buckmaster.

Can an Employee Prepare For New Employment Without Breaching Their Fiduciary Duty to their Current Employer?

Breach of Fiduciary Duty : Texas Non-Compete Law Blog

It’s long been the law in Texas that an employee can, while still employed, prepare to compete with his employer, as long as he doesn’t actually do so. If he does compete with his employer, he can be found liable for breach of fiduciary duty. In a recent case decided by the federal Fifth Circuit Court of Appeals, the court explained the reason for the preparation vs. competing distinction:

In general, an employee or other agent who plans to compete with the principal does not have a duty to disclose this fact to the principal. To be sure, the fact that an agent has such a plan is information that a principal would find useful, but the agent's fiduciary duty to the principal does not oblige the agent to make such disclosure. . . .  In this respect, the social benefits of furthering competition outweigh the principal's interest in full disclosure by its agents.

Basics of Breach of Fiduciary Duty & Negligence Law

 

Corporate officers, directors, members, and employees owe a duty of care to the corporation.  Breach of duty is part of a negligence lawsuit.   In a negligence lawsuit there are four elements to consider: duty, breach of duty, causation and damages. For breach of duty, it must be decided whether or not the defendant, the one being accused of negligence, behaved in a way that a reasonable person would have under similar circumstances given their position with the company and level of responsibility. If no duty is owed then there is no negligence lawsuit.

 

Corporate Governance Helps Insulate Companies From Shareholder Actions

Corporate Governance provide investors with a framework to ensure compliance with fiduciary and contractual duties to shareholders and investors. Too often governance suffers as a result of a failure of formalities and systems to ensure oversight.

• Adequate shareholder control of the corporation
  
• Effective monitoring of management’s performance
  
• Effective oversight of board’s resolutions
  
• Close alignment of management’s and shareholders’ interests
  
• Increased productivity and enhanced firm value; and
  
• Effective deterrence of fraud and other forms of non-compliance
  

Successful governance policies—encompassing the litigation, regulatory, and policy-making arenas—will make corporate directors and executives more accountable to shareholders; instill confidence among investors, retail and institutional alike, in the integrity of financial markets; and protect employees, bond-holders, and other corporate constituents from fraud and egregious corporate conduct.

Lawyers Define Shareholder Rights

Traverse Legal's lawyers have worked with minority shareholders asserting their rights to records, distributions, dividends, voting, corporate books, enforcement of articles of incorporation / operating agreements and a variety of other matters.  In the last twelve months, our attorneys have worked on minority shareholder issues, involving over  $10 million dollars in minority interest value and obtained millions of dollars in settlements on behalf of oppressed shareholders.

If you believe that your minority shareholder rights are being violated, contact a Traverse Legal lawyer today.  Our attorneys will work with you to devise a strategy which accomplishes your goals.