• Prominent Trial Lawyer Stan Roman Joins Coblentz Patch Duffy & Bass

    San Francisco (August 28, 2017) – San Francisco-based law firm Coblentz Patch Duffy & Bass LLP  welcomes Stan G. Roman to the firm’s partnership. Stan joins Coblentz from litigation boutique Keller, Sloan & Roman LLP, where he was a founding partner. Prior to that, Stan was a partner at Bronson, Bronson & McKinnon.

    A go-to trial lawyer with more than thirty years of experience, Stan Roman has extensive trial and appellate experience in complex business litigation matters. He has repeatedly been chosen to defend the major accounting firms, the country’s largest law firms, directors and officers of public companies, employers, and others who have been sued or investigated. He has prosecuted and defended scores of cases involving large business transactions.

    “We welcome Stan to Coblentz,” said Jeffrey Knowles, co-managing partner of Coblentz. “We have known Stan for years, and he’s a tremendous lawyer. Stan’s trial experience will add even more punch to our litigation practice.”

    Stan has had great success in many significant jury trials, and also has deep experience with court trials, administrative trials, domestic and international arbitrations, and alternative dispute resolution proceedings. He has represented both foreign and domestic clients in a wide variety of industries and professions.

    “I have regarded Coblentz as a very special firm for many years,” said Stan. “I am thrilled to join such a smart and talented group of lawyers.”

    About Coblentz Patch Duffy & Bass LLP
    Coblentz Patch Duffy & Bass LLP is a premier provider of innovative, results-oriented legal services, specializing in real estate, litigation, business, intellectual property, employment, tax and family wealth. The National Law Journal named Coblentz to its 2016 Midsize Hot List, the fourth year the firm has made this prestigious nation-wide list. U.S. News & World Report recognizes Coblentz as one of the nation’s top law firms in the Best Law Firm list, with national rankings in 13 practice areas and six prestigious “Tier 1” rankings in the highly competitive San Francisco law firm category. For more information: www.coblentzlaw.com.

    Categories: News
  • Landmark Second Circuit Ruling Clarifies the Standards for Mobile Contracts

    Authored by Timothy Crudo, Rees Morgan, Skye Langs, and Mark Hejinian.

    On August 17, 2017, the United States Second Circuit Court of Appeals issued a landmark ruling in Meyer v. Kalanick1 that clarifies the standards for contract formation in the age of smartphones and mobile contracting, providing important guidance to companies about how to design enforceable mobile contracts. The Second Circuit, applying California law to determine the enforceability of the arbitration clause in Uber’s Terms of Service (“Terms”), held that a “reasonably prudent smartphone user” unambiguously assents to a conspicuously hyperlinked contract when he downloads a smartphone application (“app”) to his mobile phone and signs up for an account. Coblentz, led by Timothy Crudo, Rees Morgan, Mark Hejinian, and Skye Langs, had filed an amicus brief in the case on behalf of the Internet Association and the Consumer Technology Association urging the Court to adopt the “reasonably prudent smartphone user” standard.

    The case arose after Plaintiff Spencer Meyer used his mobile phone to download Uber’s smartphone app and register for an account. During the registration process, Meyer entered his credit card information and, on the same screen, clicked a button marked “Register.” The “Register” button was located just above a notice, hyperlinked to Uber’s Terms, that “(b)y creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY.”

    After using Uber’s app to hail several rides, Meyer filed a class action lawsuit alleging that the app facilitates price fixing. Uber moved to compel arbitration under its Terms, but Judge Jed Rakoff of the United States District Court for the Southern District of New York held that the contract was not binding because the registration page did not provide reasonably conspicuous notice of the Terms, nor did Meyer unambiguously manifest assent to them.2

    The Second Circuit reversed, cutting through the weeds of numerous decisions governing contract formation in the modern landscape of “clickwrap,” “browsewrap,” and “sign-in-wrap” agreements. While the question of whether a consumer has assented to terms of an online agreement turns on the design of the user interface – such as the proximity between the link to the contract terms and the manifestation of assent, as well as the amount of visual clutter on the page – the Court viewed the precedent of online contracting through the lens of what a “reasonably prudent smartphone user” would expect when downloading and using a mobile app.

    The Court recognized that smartphones are increasingly ubiquitous, with modern consumers conducting significant business through mobile apps, including shopping, online banking, and health management. A reasonable smartphone user engaged in such e-commerce understands that by downloading apps and creating accounts, they are entering into contracts. Explicitly applying, for the first time, the standard of a “reasonably prudent smartphone user,” the Court held that, as a matter of California law, the design of the registration page on Uber’s mobile app provided “reasonable notice” to a smartphone user that he or she was entering into a contract, and that by clicking the “Register” button, Meyer unambiguously assented to Uber’s Terms.

    The Second Circuit’s ruling clarifies the standards for mobile contract formation and provides companies with important guidance for designing user interfaces that will support the enforceability of internet or app-based consumer contracts. The ruling does not, however, mean that businesses no longer have to worry about the validity of the contracts their customers execute through online or mobile applications. Consumers are not automatically on notice that they are entering into a contract merely because they have downloaded and used a smartphone application or completed an online transaction. The terms and conditions still must be conspicuous, and it must be clear when and how consumers assent to them.  But the Second Circuit’s opinion recognized that the conspicuousness of the terms and the sufficiency of assent should be analyzed from the perspective of a reasonable person who engages in mobile contracting – someone, in other words, who would understand the import of hyperlinks and other common indicia of contract formation in the e-commerce era.

    Now is a good time for businesses to review their online and mobile contracting practices. Make sure that your terms and conditions are highly visible on an uncluttered page or screen. Also make sure that users are required to affirmatively indicate their assent to the terms, either by clicking a button or checking a box, before engaging in any of the activities you intend to have governed by the contract. For mobile phone applications, the terms (or a link to them), along with a way to indicate assent, should be the only things displayed on the screen at the time of contract formation. Finally, while not necessarily required, requiring users to actually scroll through all the terms, and affirmatively indicate that they have read them and agree to them, goes a long way towards ensuring that users are on clear notice of the terms and have objectively assented to them.

    For further information or guidance regarding the validity and enforceability of your mobile contracts, contact Timothy Crudo at tcrudo@coblentzlaw.com or Rees Morgan at rmorgan@coblentzlaw.com.

    1 Meyer v. Kalanick, Nos. 16-2750-cv, 16-2752-cv (2nd Cir. Aug. 17, 2017).

    2 Meyer v. Kalanick, 200 F. Supp. 3d 408 (S.D.N.Y. 2016).

  • Seventeen Coblentz Partners Recognized by Best Lawyers in America® 2018

    Seventeen Coblentz partners have been recognized by Best Lawyers in America® in its 2018 listing of the nation’s top legal talent. Partners Jon Bass, Jeff Bernstein, Pam Duffy, and William Hutton have been recognized annually by Best Lawyers for over 30 years, and three new partners have been added to the 2018 listing as well: Tim Crudo, Gregg Ficks, and Julie Treppa

    Business partner Karen Frank has also received the Best Lawyers® 2018 Copyright Law “Lawyer of the Year” award in San Francisco.

    Congratulations to these Coblentz attorneys for inclusion in The Best Lawyers in America® 2018 guide in the following categories in San Francisco:

    • Jon Bass: Commercial Litigation, Litigation – Land Use and Zoning, Litigation – Real Estate
    • Jeff Bernstein: Litigation and Controversy – Tax, Tax Law
    • Tim Crudo: Criminal Defense: White-Collar
    • Pam Duffy: Environmental Law, Land Use and Zoning Law, Litigation – Environmental, Litigation – Land Use and Zoning, Real Estate Law
    • Phil Feldman: Litigation – Trusts and Estates, Trusts and Estates Law
    • Gregg Ficks: Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law
    • Karen Frank: Copyright Law, Litigation – Intellectual Property
    • Alan Gennis: Real Estate Law
    • William Hutton: Tax Law
    • Jeff Knowles: Commercial Litigation
    • Danna Kozerski: Real Estate Law
    • Barbara Milanovich: Real Estate Law
    • Jim Mitchell: Trusts and Estates Law
    • Harry O’Brien: Land Use and Zoning Law, Real Estate Law
    • Richard Patch: Litigation – Antitrust
    • Julie Treppa: Non-Profit / Charities Law
    • Tay Via: Land Use and Zoning Law, Litigation – Land Use and Zoning

    The Best Lawyers annual guide is based on peer review and feedback from tens of thousands of leading attorneys leading lawyers who confidentially evaluate their professional peers. In 2018, Best Lawyers analyzed more than 7.4 million votes in 198 metro areas and across 145 practice areas to select more than 58,000 attorneys across the United States.

    Categories: News
  • BEWARE: Broad New CA County and City Authority To Impose Transfer Tax on Entity Interest Transfers

    The California Supreme Court has just granted broad authority to counties and cities to impose documentary transfer tax (“DTT”) on certain transfers of interests in legal entities. Before June 29, 2017, tax practitioners’ prevailing view was that documentary transfer tax generally could not be imposed on transfers of interests in legal entities. There were two exceptions. First, for transfers of partnership interests that caused a partnership to terminate for tax purposes. Second, for charter cities that were permitted to enact their own DTT ordinances and had, in fact, enacted broader DTT rules. No more. On June 29, the California Supreme Court decided in 926 North Ardmore Avenue, LLC v. County of Los Angeles1 that all California counties and cities may impose DTT on certain transfers of interests in legal entities.

    California Revenue and Taxation Code Section 11911 allows a county or city to impose DTT on “each deed, instrument, or writing” by which real property “shall be granted assigned, transferred, or otherwise conveyed.” The statute’s language does not appear to permit DTT to be imposed on transfers of legal entity interests, such as stock, partnership interests, or LLC membership interests. Charter cities, however, are permitted to enact their own DTT ordinances, some of which have imposed DTT more broadly. For example, a San Francisco ordinance permits DTT to be imposed any time that a transfer of ownership interests in a real property owning legal entity would be treated as a change in ownership of real property under California Revenue and Taxation Code Section 64.

    926 North Ardmore involved an attempt by the Los Angeles County Recorder to impose DTT on a transfer of partnership interests that gave rise to a change in ownership of the real property that the partnership owned indirectly through a lower-tier entity. Los Angeles County had not enacted an ordinance specifically imposing DTT on such transfers. The taxpayer, 926 North Ardmore Avenue, LLC, challenged this attempt. The California Supreme Court found for Los Angeles County. It ruled that despite the lack of any specific statutory authorization, California counties and cities can impose DTT on transfers of legal entity interests that give rise to a “change in ownership” of real property held by such legal entities under California Revenue and Tax Code Section 64(c) or (d). That is, DTT can be imposed even if the government entity imposing DTT is not a charter city that has enacted an ordinance allowing for DTT imposition in that situation. This is a sea change in the DTT world and contrary to what practitioners had widely believed was the state of the law.

    California Revenue and Taxation Code Subsections 64(c) and 64(d) provide that real property held by a legal entity undergoes a change in ownership in two distinct situations. Under Subsection (c) and related property tax rules, a change in ownership occurs when any person or entity acquires control of a legal entity. Specifically, this occurs when a person or entity comes to own more than 50 percent of the voting stock of a corporation or more than 50 percent of both the capital and profits interests of a partnership or LLC. This ownership threshold can be met through direct ownership of the interests or indirect ownership through upper-tier entities. Under Subsection (d), a change in ownership of real property held by a legal entity occurs when: (1) persons or entities have contributed real property to a legal entity, (2) the transfer was exempt from reassessment under the so-called proportional ownership exception, and (3) the original contributors then, collectively, cumulatively transfer more than 50 percent of the total interests in the legal entity. In the case of a corporation, the 50 percent threshold is met when more than 50 percent of the corporation’s voting stock is transferred. In the case of a partnership or LLC, the 50 percent threshold is met when more than 50 percent of the profits interests and capital interests in the partnership or LLC are transferred.

    Consequently, taxpayers must now carefully consider with their tax advisers whether any transfers of legal entity interests could cause a change of control of a legal entity that holds real property or a could cause them to exceed the 50 percent thresholds described in Subsection 64(d). Before 926 North Ardmore, the prevailing view was that these concerns only needed to be addressed in charter cities with ordinances specifically allowing DTT to be imposed in these situations. After 926 North Ardmore, these are statewide concerns. Given that DTT rates of tax can be substantial in some jurisdictions, for example up to 3 percent in San Francisco, we encourage tax payers to seek the advice of counsel when transferring interests in any legal entity that owns real property, whether directly or indirectly through a lower-tier entity.

    1. Cal. S. Ct. No. S222329.