Unfair business practices lawsuits are quite common in California disputes between business partners and shareholders. What constitutes unfair business practices? Have you been the victim of a deception or fraud in a business context? These issues are much more common that you might realize and you will need an experienced, proven business litigation attorney to protect your interests and assert your rights.

There are two primary elements in unfair business practices lawsuits: the power of one individual over another and some element of fraud, deception or wrongful actions. These disputes are usually found in the context of business relationships within the same company, but can extend to another company or even a business competitor.

Those with a fiduciary duty are bound by law to act in good faith and to always provide their clearest and highest levels of judgement and actions when dealing on behalf of the company or its owners and investors. Fiduciaries must place the interests of those they serve above their own self interests. Therefore, self-dealing and the breach of a fiduciary duty is a civil offense, harmful and an unfair business practice under California law.

We often discuss a breach of fiduciary duty or self-dealing when counseling our clients who are members in an LLC or shareholders in a corporation. This can include acts of theft or embezzlement, unethical bookkeeping, collusion or other financial crimes. For example, it is unfortunately common for someone with access to accounts payable or payroll to create an imaginary supplier or employee and the “pay” that entity in order to siphon money from the company.

Commingling of personal and business assets is another form unfair business practices.

Employees can also be the target of unfair business practices lawsuits.  Employees who take wrongful actions against the interests of their employers include those who have misappropriated trade secrets and use this information in an attempt to compete against their former employer.

Pro-Tip: “Beware of little disputes. Little disputes can become big financial disputes, especially when fraud is implicated. This opens the door to extended damages including opposing attorney’s fees.

What was the effect of your action? Were you accurate in your representations? Did someone detrimentally rely on something you did, say or said to their detriment? And were there any other statutory violations that you committed in the context of whatever contractor agreement you have that would make it unfair to whoever you’re dealing with or to your competitors? And the way you do business, if you don’t pay your employees their legal employment taxes and you don’t take out withholdings and your competitor does, they’re going to say it’s not fair. Misuse of power is another example of I have power over you in one form or another and I’ve abused that privilege.

When you have a 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. And if they can make their case, then the wronged party is able to recover all their attorneys’ fees.” – Dan Watkins, Founding Partner

These are serious cases requiring extensive experience and a proven track record of successful outcomes.  There is often the need to seek an immediate injunction or a cease and desist order in addition to the pursuit of associated damages.  An inexperienced or unwary attorney can quickly find that a small dispute has become an expensive piece of business litigation.

This is why it is important to seek the advice and counsel of the proven business dispute attorneys at the Watkins Firm.  We have over 40+ years of experience representing business professionals, shareholders, members in an LLC and companies in every form of business-related dispute. 

We invite you to review our podcast Episode 25 – Unfair Business Practices Overview as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.