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Hackensack Business & Commercial Law Blog

Pizzeria intends to countersue Turnpike Authority

A Florida company that was sued by the New Jersey Turnpike Authority has notified the agency of its intention to countersue if the issue isn't dropped. The business dispute arose in connection with the pizzeria's logo because of the use of the Garden State Parkway shield in the graphic. The pizzeria opened in 2006, using a variation of its current logo from the beginning.

According to an attorney for the pizzeria, the shield is in the public domain. Additionally, the attorney informed representatives of the agency that their complaint doesn't indicate details about the registration of the logo. The current logo for the pizza restaurant was reportedly registered at the federal level in 2011. Additional points made by the company's lawyer include the fact that it would be difficult for an individual to confuse the two entities because pizza and the New Jersey Turnpike are two very different operations. While logos for both organizations include a map of New Jersey centered in a circle, the wording of the two symbols is significantly different.

AIG resolves shareholder dispute

Investors in New Jersey may be affected by recent news that AIG reached a settlement to resolve its shareholder lawsuit by paying out $960 million. The shareholder lawsuit resulted from the 2008 bailout provided by the federal government. AIG officials disclosed details of the settlement during its second quarter earnings call. The shareholders were seeking upwards of $100 billion in restitution.

The plaintiffs claim they made investments into the insurance company based on false and misleading information provided by executives, directors and an independent auditor concerning its operations and financial health. The 2008 financial crisis and calls from creditors led to AIG seeking $180 billion from the U.S Treasury. AIG officials claimed that resolving the dispute allows the company to focus on its future. The latest announcement has been a part of a series of moves made as the company readies for a new CEO in September 2014.

Online real estate company Zillow buys its main competitor

A recent business move by the real estate website Zillow Inc. might be of interest to New Jersey residents. Zillow is set to obtain an even bigger online real estate presence after agreeing to purchase Trulia Inc., its main competitor, for $3.5 billion after lengthy contract negotiations. With 83 million unique monthly visitors, Zillow already held the No.1 spot in the online real estate market. The purchase of the No. 2 ranked real estate website Trulia will offer the company an additional 54 million unique monthly visitors.

The transaction will combine both of the companies while still maintaining separate Zillow and Trulia brand identities. According to spokespersons for both of the companies, there is minimal overlap of customers who visit either of the websites. Around half of the unique monthly visitors to Trulia's website reportedly don't look for properties on Zillow.

Virgin America files for an initial public offering

Investors in New Jersey may be interested to learn that Virgin America Inc. has filed for an initial public offering. The announcement comes at a time when the top-ranked airline is reportedly interested in expanding its operations in the U.S. airline market. Currently, Virgin America flies to 22 cities across the United States and Mexico and operates primarily out of San Francisco and Los Angeles.

British billionaire Richard Branson was involved in Virgin America's business formation and now owns a 22-percent stake in the company. Because Branson is a foreign investor, his ownership of the U.S. airline is restricted. In 2013, Virgin America reported $1.42 billion in revenue and $10.5 million in profit. Branson also has a 51-percent stake in Virgin Atlantic airlines.

The importance of a business plan

There has been a recent trend of entrepreneurship advocates telling people interested in starting a business in New Jersey or elsewhere in the country that creating a business plan isn't necessary. Some believe that due to the fast pace of the current business world, it is better to just get started and react as issues develop. While this may be attractive due to the fact that creating a business plan takes time and effort, there are a number of reasons individuals should take the time to do so, one of the biggest being that it increases a new enterprise's chance of success.

Some of the reasons for the increased ability to succeed are that people who create business plans are better able to compare their expectations for products and income with reality. Creating a business plan requires that companies map out a plan of action and take the time to calculate costs and compare them to expected income as well as the capital needed to operate.

New Jersey corners life-sciences market in real estate

A Houston drug company with a new influx of $65 million plans to move to New Jersey. Pernix Therapeutic Holdings revamped the company, installed new executives and found investors willing to back company growth as they look at developing specialty drugs. However, the company will need to relocate to New Jersey because of the established pharmaceutical talent already there.

One consideration is a transition from larger campuses to renting space in smaller facilities. Some companies have vacated New Jersey, but people with a strong background in the industry might not have left the state. These individuals sometimes transitioned to smaller, local companies. As for Pernix, they relocated to a 6,400 square-foot building in Morristown. Despite reduced square footage, the new location has space for expansion and will provide better accessibility to New York City. The proximity to New York City with access to its financial marketplace along with certain transportation options has also attracted businesses.

Deciding on the best structure for a business

Before starting a business in New Jersey, it is important to think about the best structure based on plans and goals. Experts indicate that this decision about legal structure is one of the most important parts of the business formation process. The legal structure plays an important role in determining personal liability and taxation. No specific structure is necessarily the best; the unique details pertaining to a startup are important for making the decision to form a sole proprietorship, partnership, corporation or LLC.

Those who have been involved in more than one business startup emphasize the importance of investing in sound advice prior to formalizing a business structure. Sources of information include accountants, lawyers and organizations such as the Service Corps of Retired Executives.

Man convicted of fraud in New Jersey court

A New Jersey federal court recently obtained a guilty plea from a 41-year-old businessman who was accused of fraud. The businessman is a resident of Lithonia, Georgia, but the charges were brought against him in Newark. The business owner pleaded guilty to one count of conspiring to commit wire fraud, which involved defrauding investors of more than $800,000.

The businessman's sentencing hearing will be held on Sept. 30, at which point the man could be subject to a fine and sentenced to up to 20 years in prison. A co-defendant allegedly involved in the wire fraud conspiracy is also facing charges.

Supreme Court releases decision on investor class-action lawsuits

New Jersey business owners may be interested in a recent Supreme Court decision reducing a class-action plaintiff's ability to succeed in a shareholder action. Some, including three of the justices, believe that this decision does not go far enough.

In 1988, the Supreme Court decided a landmark securities litigation case, Basic v. Levinson. The holding in Basic stated that a court considering a claim of securities fraud should presume that any public misstatements are built into the share price and influence purchasing decisions. This allows the investors to claim reliance on the false statements when buying shares. Since 1996, there have been thousands of class-action securities fraud lawsuits, resulting in settlements totaling nearly $80 billion.

Considering an LLC for a New Jersey business

An individual who is new to owning and operating a business may need some insight as the foundation is laid. The structure considered may affect everything from licensing fees to income tax returns, making it important to evaluate a variety of issues before making a decision about the type of business formation. Additionally, it may be important to consider one's personal assets and insurance to determine how much risk is involved in choosing or not choosing an option such as an LLC.

If there are minimal personal risks involved in a venture, a sole proprietorship may be appropriate. However, an LLC offers the opportunity to protect one's personal belongings and finances from liabilities incurred through business activities. It is important to keep in mind that corporate debt may only be granted with personal guarantees involved, meaning that the means of securing funding may be just as important as the form the business takes. In dealing with taxes, the IRS does not currently offer a return option for an LLC, but an LLC may be treated as a sole proprietorship for filing purposes. It may also be treated as a C or S corporation, but the default is partnership status where there is more than one member .

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