Understanding unfair business practices in California is important for any business owner, partner, shareholder, member in an LLC or investor. Unfair business practices are a broad range of business behaviors and actions that result in legal and financial exposure and lawsuits.
Key Takeaways about Unfair Business Practices in California:
- Unfair business practices are common in disputes and lawsuits between those who are doing business together.
- The primary ingredient in these cases will usually involve some form of fraud or deception.
- Seemingly insignificant disputes can evolve into remedies involving punitive damages, resulting in heavy fines and recovery of attorneys fees.
Here in California, unfair business practices are part of our Unfair Competition laws, and apply to harmful actions by those who are conducting business within our state. Unfair actions can occur at any point in the business cycle, such as during a transaction, misappropriating trade secrets, breaching a contract or a fiduciary duty, commingling of assets and money, embezzlement, bribery, theft, unethical accounting practices including purposeful efforts to rig the books to cover inappropriate (often illegal) behavior.
Unfair business practices in California is commonly included in most business lawsuits based upon some form of fraud, deception, misrepresentation, misappropriation, falsification of records including financial statements or tax returns, or using business funds for personal use. The challenge with this allegation is it opens the door to the recovery of punitive damages and eligibility to recover extensive fees and legal costs, often taking a small dispute and turning it into a six or seven figure consequence.
This is why it is important to work with the experienced business litigation attorneys at the Watkins Firm. Draw on our more than 40 years of experience in successfully resolving business disputes and lawsuits. You should be pleased to learn our attorneys are able to resolve the vast majority of our business dispute matters through effective, leveraged negotiation. This is the fastest, and least expensive path to resolve these forms of business disputes.
Pro-Tip: “What is something an unfair business practice might include? A better question is what would not be considered to be an unfair business practice? Because it seems to be in every lawsuit that we defend, you sue someone for sexual harassment, you’re going to get sued for unfair business practices. You sue them for any type of fraud in the business arena, you’re going to get sued for unfair business practices. You sue them for unfair competition, there you go, you’re going to get sued again, under Business and Professions code section 17,200 and 17,500. And in between, there are many, many laws talking about what’s unfair and what you can sue for. And it seems to cover everything. It seems to be included in almost all lawsuits, and it has an attorney’s fees clause.
Look at it from two perspectives. If you are being sued by someone you’re dealing directly with and they say, ‘well, what you’re doing is gaining an unfair business practice over me, you’re violating my rights.’ That’s a direct unfair business practice. If the person across the street is in business and it’s similar to yours and they’re doing things that are affecting your business to their advantage and your detriment, that could be an unfair business practice. So as broad as it is, and as big many large examples as it is, it’s important to see your lawyer.
When you’re in business and you have contracts, this is a big way people get in trouble. They put things in their contracts that are deemed to be an unfair business practice. And those can be anything from how they price, how they pay their employees, how they advertise, how they labeled their products. All those things can turn into unfair business practices and a cause of action. And you’re getting sued.
Misuse of power is another example of I have power over you in one form or another and I’ve abused that privilege. How does that come into play in these types of actions? When you have superior negotiating position and you enter into an agreement or a relationship in business and it turns out that you’re getting an unfair advantage over it, in addition to the unconscionable, unfair fraud cause of action, you’re going to get this unfair business practice cause of action. And it’s going to say that the terms of the contract should not be held against me. And you’re going to get a list of about 12 causes of action and one will be this unfair business practices one. And if they can make that stick, then they get all their attorneys’ fees, and potential punitive damages. A case in the tens of thousands can quickly become a case with a six or seven figure exposure.” – Dan Watkins, Founding Partner.
Understanding unfair business practices in California is important for anyone who is involved in the conduct of business in our state. There are too many ways to make the wrong decision or make a mistake when acting in authority or a position of fiduciary duty. You will need the proven, experienced representation of the Watkins Firm.
We invite you to review our podcast Episode 25 – Unfair Business Practices, as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
