Even After Winning Lawsuits Company Must File for Bankruptcy [e123]

November 26, 2014

The guys talk about Aereo’s recent Chapter 11 bankruptcy filing, even after it had won multiple lawsuits. They also answer the special Thanksgiving question, “Can I provide a free Thanksgiving meal to my employees?”

Full Podcast Transcript

NASIR: All right. Welcome to Legally Sound Smart Business. Uh, I messed up.

MATT: You didn’t mess up. That’s the name of the podcast.

NASIR: All right, welcome to our business podcast where we cover business in the news and answer some of your business legal questions that you, the listener, can send in to ask@legallysoundsmartbusiness.com.

Happy Thanksgiving!

MATT: It’s a day early but…

I assume people are traveling the day this comes out so they’ll probably listen to it during their Thanksgiving meal.

NASIR: I figure.

MATT: I know I plan on taking my phone out and just pressing play and letting everyone listen to it.

NASIR: Oh, I’m getting one of those stereo components that I just plug it into at the dinner table, and I’ll turn it up really loud so no one can talk.

MATT: People are going to treat this like the Serial podcast which I don’t know if you’ve followed at all. Have you followed that?

NASIR: Cereal as in cereal that you eat or serial as in a series?

MATT: The latter. Have you not heard about that?

NASIR: No.

MATT: It’s the most popular podcast right now by far.

NASIR: I’ve never listened to a podcast in my life.

MATT: I haven’t listened to it, but I’ve just heard about it. I think it’s fourteen episodes and there’s a new episode each week and it’s an on-going story, like a crime-related story.

NASIR: And it’s very popular with only fourteen episodes?

MATT: I don’t think they’ve even had fourteen episodes yet. It’s a series and it’s once a week and it’s insanely popular. But I won’t expect you to know because you don’t keep abreast of the stories in the news.

NASIR: A turkey breast?

MATT: Yeah, like what I did there?

NASIR: Yeah.

MATT: That was intentional.

NASIR: I wasn’t sure if you that intentional or not so I just wanted to connect the dots for everyone.

MATT: Well, let’s talk about a good story for Thanksgiving – or right before Thanksgiving – about this bankruptcy.

NASIR: Yeah, it’s always a big topic around this time of year.

MATT: Especially when they had big rounds of layoffs a couple of weeks ago, right before Thanksgiving, which is what everyone wants. I think the worst time to lay someone off is between Thanksgiving and Christmas, probably.

NASIR: Oh, okay. So, then we’ll get rid of you after then.

MATT: Is it Aereo? I’m assuming I’m pronouncing that right.

NASIR: I don’t know. I know we’ve covered this in the past but I think it’s derived from the “aer” as in a-e-o – never mind.

MATT: We’ll just go with Aereo.

NASIR: I was trying to break it down to its Latin root but then I realized I don’t know Latin.

MATT: No problem. Well, we’ll go with Aereo.

NASIR: It’s an over-the-air streaming service so that’s why I was thinking, like, kind of like aeroplane.

MATT: Oh, okay. Yeah, I could see that. Well, it’s described as near-live TV so I think that’s also called “delayed” but that’s fine. So, they filed a Chapter 11 bankruptcy which a reorganization in bankruptcy court and, let’s see, New York this week? Sometime very recently. Yeah, so I guess that this came after a big round of layoffs which is no surprise there. This is pretty interesting. I mean, Chapter 11, that’s going to be different than a straight up discharge where you’re basically shutting down shop. They’re making an effort to kind of reorganize, pay some of their debt off while still continuing to survive. I think they’ve kind of just missed it on the technology front and not evolved how they should have so I don’t know if they’re going to make it anyways. But, you know, at least they’re making an effort to, I suppose.

NASIR: Yeah, I mean, the reason they had to go through this bankruptcy is because of all these lawsuits. So, basically, what they do is they have some kind of antennae that is very, very small – like the size of the tip of your finger – that can get these over-the-air network channels in HD like Fox, CBS, NBC, et cetera, and then it’s recorded on the cloud, and then you can view it. The issue in New York was a copyright violation. Okay. Well, what’s the difference then of a cable box that records it on your device? The differentiation is now that it’s storing on the cloud and so forth.

Long story short, they had about $25 million in funding, and most of this was basically a war chest to fight this litigation because their operating costs were very low. But then, what happened was that they started winning these lawsuits in New York and other states, but then they had to go to the Supreme Court, otherwise this unlimited litigation is not going to work for us. And, of course, that’s what they do, but then they lose. And so, with it being the Supreme Court, that shuts them down pretty much and so they had to take a step back and they’re pretty much lost their funding as far as what they’ve already used for legal. Now, this is where we’re at. They’re not shutting down their business but reorganization is similar to a Chapter 13 for an individual in the sense that there is a reorganization of their debts so debts are put into a plan and so forth and paid off accordingly. And even the company’s allowed to sell some of its assets.

So, it’s not really very common for most small businesses because it’s usually expensive. But, you know, if you’ve been established for a while, it’s always an option.

MATT: This is an example of lawsuits just ruining a company, and this is a company too that has, you know, multiple wins in cases. It’s not like they’re just getting sued and losing. They’ve won some big cases and they’re still in this predicament because they have all these different lawsuits that are coming in, in different cities, different states. It’s just going to catch up to you at some point.

NASIR: You’re right. That’s what’s interesting is that they went to the Supreme Court because they didn’t want to try this anywhere else. They wanted one final decision to end it all, but it ended up backfiring against them and the US Supreme Court ended up saying that the essence of this Aereo ruling is that they are equivalent to a cable company, basically. They’re not merely an equipment provider like, what was it, TiVo? That was something kind of similar, but they were providing equipment. But the act of actually I think saving it on the cloud was the issue here.

MATT: That’s too bad.

NASIR: Very sad.

[MUSIC]

MATT: All right, question of the day.

“Can I provide a free Thanksgiving meal to my employees?”

No such thing as a free lunch, as they say, right?

NASIR: Well, we talked about this – I don’t know – a month or two ago, and that was more of an IRS issue. This is more of a wage and hour issue. And, yes, I’ll just get into it whether this free lunch or this lunch Thanksgiving meal that you’re providing for your employees, you’re trying to do something nice. Well, the employees can go after the employer for overtime saying, “I should get paid for this lunch that I’m having even though it’s free and you’ve something very nice for me.”

MATT: Yeah. I don’t want to say the employees are arguing this because the reality is that no employee came up with this argument. It’s that there’s this class of employees that are represented by an attorney that tries to argue that, “Okay, if you give your employees free food, especially on a regular basis, and they work overtime, then the overtime rate should be based upon the rate that includes this value that they’re receiving in these regular meals.”

And so, since overtime is based upon the 40-hour work week and time and a half, by including this, let’s say a sandwich that’s $4.00 or $5.00 that you give to your employees, times that by five or however 7many meals and add that to the 40-hour work week schedule, and that’s how you derive your overtime. That’s their argument. I know it seems silly, but that’s what’s going on right now in some litigation.

NASIR: Yeah, and there’s actually been quite a few of these cases and it’s not even recent either. There was a case in the 70s – as far as in the late 70s – that a similar issue was discussed and, when it gets into some pretty big specifics in terms of like the calculation of how much an item of food costs and what they’re charged for versus what the value is and then their calculation for regular rate, the pay is going to be different because of the value of this meal, the specifics of the meal they’re getting.

I guess I’ll say, first of all, if someone wants to do this, you know, your employees probably aren’t going to complain but, from a legal aspect, you can kind of build this into their employment agreement. There’s clauses you can put in there to kind of safeguard against this if you’re really concerned. And, from a legal perspective, I’ll say, yeah, just put it in there so you’re protected.

MATT: You’re right. Even though it’s like, “Okay, this is a non-issue but, hey, we’re having an agreement anyway, I might as well throw it in.” And so, you know, if you have this program where you are providing lunch to your employees then, in your employment menu, you might just want to quickly address it with a one line sentence here or there.

NASIR: Just here we are, here’s the law. Federal and state law both hold that meals furnished to employees as a convenience to the employer are excluded from the regular rate of pay. This is in California so, if you’re in another state, I don’t know what to tell you.

MATT: I’m sure it’s going to be similar but you never know.

Reminds me of when some place I worked for, I went back for Thanksgiving one year in Indiana and I went to see one of my old places I worked out and they were trying to make a Thanksgiving meal and my supervisor had this huge turkey and he’s like, “Yeah, we’re going to deep-fry it,” and he drops it into this thing and oil just goes all over the place. He just got oil over and he was like, “Well, this is ruined.” It’s like, you know, canola oil or something.

NASIR: Yeah.

MATT: Whatever you use to deep-fry. I just thought that was funny. That has nothing to really do with this.

NASIR: He just dropped it in there? I think you’re supposed to slide it in, right?

MATT: He’s like, “Here we go!” It went everywhere. I just thought that was pretty funny. It didn’t get on me.

NASIR: Well, hopefully everyone’s safe with their frying turkeys tomorrow. There’s always accidents every year for that.

MATT: Yeah, there’s always some – I was going to say “fatalities” but I don’t think it’s that bad. “Every hour, someone dies from a turkey frying explosion.” There’s always accidents. It’s the worst.

NASIR: Okay. So, I think what we’ll do is we’ll end it here and we turn back next week. We’re going to skip this Friday’s episode. So, enjoy your time off. I know every Monday, Wednesday, and Friday, you’re waiting for episodes to publish so just, you know, take some time off and spend it on something personal.

MATT: We should explain that we can’t do Friday because you’re an avid Black Friday shopper so you’re going to be out the whole day.

NASIR: Yeah. Well, Black Friday is starting now, right? It’s basically Black Friday now and might as well go to the store and line up.

MATT: Oh, yeah. I guess, by the time this episode comes out, yeah. Some places are open. A lot of places have started to open up on Thursday nights.

NASIR: I think it was last year we covered all these employers that are making their employees work on Thanksgiving so it’s definitely been a year but I remember talking about that.

MATT: That means we must have been recording for a year now.

NASIR: It’s a good guess. All right, everyone. Thanks for joining us.

MATT: Yeah, keep it sound, keep it smart.

Legally Sound | Smart Business

By

The Podcast Where Nasir Pasha and Matt Staub cover business in the news with their legal twist and answer business legal questions that you the listener can send it to info@legallysoundsmartbusiness.com.

Get Business Legal Updates

Please provide your full name.
Please provide a valid email address.
We respect your privacy, and we will never share your information. Unsubscribe at any time.
Legally Sound Smart Business cover art

Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
Apple Podcast badge
Google Podcast badge
Spotify Podcast badge

Latest Episodes

July 14, 2021

Through a five-round championship bout, Matt travels to Texas from California to determine which state is better for business. Will it be a knockout with a clear winner or will it go to the scorecards?

June 16, 2021

Covered in this episode of Legally Sound Smart Business are some typical business mistakes blunders small businesses often make and how to avoid them. Blunder #1: Copying and pasting agreements It may sound like a good idea at the time, but this blunder comes with hidden pitfalls. Having an attorney draft terms that are specific…

February 4, 2021

How you terminate an employee can make the difference between a graceful transition to avoidable negative outcomes like a dramatic exit or even a lawsuit. We gathered a panel of experts and asked them – is there a “right way” to fire an employee? We would like to thank our guests for this episode: Amr…

December 2, 2020

The COVID-19 pandemic has turned nearly every aspect of life on its head, and that certainly holds true for the business world. In this episode, Matt and Nasir explain how the early days of the pandemic felt like the Wild West and how the shifting legal playing field left a lot open to interpretation and…

November 16, 2020

After plenty of ups and downs, our buyer has finally closed on the purchase of their business. While we’re marking this down in the ‘wins’ column, it never hurts to review the game tape. In this final episode, our hosts, Matt Staub and Nasir Pasha, return to the deal almost a year later to reflect…

September 15, 2020

The ink is drying on the signature line and things are looking great for our buyer. After so much hard work, the finish line is in sight and the cheering within ear shot.   Though the landlord is still serving friction, things seem safe to move forward and for now, our buyer will be keeping…

July 31, 2020

Though things are coming along well, the journey would not be interesting if it was purely smooth sailing. After our buyer opens escrow, they are forced to push the closing date back when suddenly a letter from an attorney was received claiming the business, we are buying has a trade mark on the name!  Now…

June 12, 2020

With frustration at an all-time high and professionalism at an all-time low, our friend the Buyer has “had it” with the Seller and quite frankly their lack of knowledge. At present our Buyer is rightfully concerned that the latest misstep from our loose-lipped Seller will threaten not only the entire operation of the businesses but…

May 11, 2020

As we go deeper into the buying process, we start to uncover more challenges from our seller and encounter some of the wrenches they are tossing our way. When we last left off in episode three our team was knee deep in due diligence for our buyer, had already penned and signed the Letter of…

April 4, 2020

One word–interloper! When a new mysterious broker enters the transaction and starts to kick up dust, Nasir and Matt take the reins. The seller signed off on the letter of intent (see episode 2), yet this “business broker” serves only friction and challenges by refusing to send financials, whilst demanding more of a firm commitment…

April 4, 2020

Just as most stories and deals start out, everyone is optimistic, idealistic and full of hope for clear skies. It’s a perfect outlook with a perfect setup for the ups and downs yet to come. Peek further behind the curtain and into the first steps of buying a business: the letter of intent. After the…

April 4, 2020

When a savvy buyer hears opportunity knocking to purchase a prime positioned business, she decides not to go it alone and taps in the professionals to help navigate what could potentially be a fruitful acquisition. “Behind the Buy” is a truly rare and exclusive peak into the actual process, dangers, pitfalls and achievements, that can…

August 7, 2019

GrubHub is subject to two “matters of controversy” that have likely become common knowledge to business owners: “fake” orders and unfriendly microsites.

May 28, 2019

In this podcast episode, Matt and Nasir breakdown the legal issues of the subscription industry’s business on the internet. Resources A good 50-state survey for data breach notifications as of July 2018. California Auto-Renewal Law (July 2018) Privacy Policies Law by State Why Users of Ashley Madison May Not Sue for Data Breach [e210] Ultimate…

March 12, 2019

In recording this episode’s topic on the business buying process, Matt’s metaphor, in comparing the process to getting married probably went too far, but they do resemble one another. Listen to the episode for legal advice on buying a business.

December 3, 2018

Nasir and Matt return to discuss the different options available to companies looking to raise funds through general solicitation and crowdfunding. They discuss the rules associated with the various offerings under SEC regulations and state laws, as well as more informal arrangements. The two also discuss the intriguing story about a couple who raised over…

July 24, 2018

Flight Sim Labs, a software add-on creator for flight simulators, stepped into a PR disaster and possibly some substantial legal issues when it allegedly included a Trojan horse of sorts as malware to combat pirating of its $100 Airbus A320 software. The hidden test.exe file triggered anti-virus software for good reason as it was actually…

April 17, 2018

Attorneys Matt Staub and Nasir Pasha examine Mark Zuckerberg’s congressional hearings about the state of Facebook. The two also discuss Cambridge Analytica and the series of events that led to the congressional hearings, the former and current versions of Facebook’s Terms of Service, and how businesses should be handling data privacy. Full Podcast Transcript NASIR:…

March 10, 2018

The Trump presidency has led to a major increase in ICE immigration enforcement. It’s critical for business owners to both comply with and know their rights when it comes to an ICE audit or raid. Nasir, Matt, and Pasha Law attorney Karen McConville discuss how businesses can prepare for potential ICE action and how to…

February 5, 2018

New years always bring new laws. Effective January 1, 2018, California has made general contractors jointly liable for the unpaid wages, fringe benefits, and other benefit payments of a subcontractor. Nasir and Matt discuss who the new law applies to and how this affects all tiers in the general contractor-subcontractor relationship. Click here to learn…

January 2, 2018

With a seemingly endless amount of new mattress options becoming available, it is unsurprising that the market has become increasingly aggressive. As companies invest in more innovative solutions to get in front of customers, review sites, blogs and YouTube videos have moved to the forefront of how customers are deciding on their mattresses and how…

December 7, 2017

In recent months explosive amounts of high profile allegations of sexual harassment, assault, and varying acts of inappropriate behavior have transcended every sector of our professional world. With a deluge from Hollywood and politics, and the private workforce, accusations have inundated our feeds and mass media. This harassment watershed has not only been felt within…

November 16, 2017

If you are not familiar with the EB-5 program started in 1990 to give green cards to certain qualified investors in the United States, then you may not have been alone a few years ago. Currently, the EB-5 program has since exploded since its inception and now hits its quotas consistently each year. The program…

October 10, 2017

Government requests come in multiple forms. They can come in as requests for client information or even in the form of investigating your company or your employees. Requests for Client Information General Rule to Follow Without understanding the nuances of criminal and constitutional law and having to cite Supreme Court cases, any government requests for…

August 24, 2017

Nasir and Matt suit up to talk about everything pertaining to employee dress codes. They discuss the Federal laws that govern many rules for employers, as well as state specific nuances in California and other states. The two also emphasize the difficulty in identifyingreligious expression in dress and appearance, how gender-related dress codes have evolved…

June 28, 2017

Nasir and Matt discuss the life cycle of a negative online review. They talk about how businesses should properly respond, how to determine if the review is defamatory, the options available to seek removal of the review, how to identify anonymous reviewers, whether businesses can require clients to agree not to write negative reviews, and…

June 7, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Mattbreak down social media marketing withguests Tyler Sickmeyer and Kyle Weberof Fidelitas Development. They first discuss contests and promotionsand talk about where social media promotions can go wrong,when businesses are actually running an illegal lottery, and the importance of a soundterms and conditions. Next, they…

April 3, 2017

On this episode of the Ultimate Legal Breakdown, Nasir and Matt go in depth with the subscription box business. They discuss where subscription box companies have gone wrong(4:30), the importance of a specifically tailored terms and conditions(6:30), how to structure return policies (11:45), product liability concerns (14:45),the offensive and defensive side of intellectual property (19:00),…

February 1, 2017

Nasir and Matt discuss the suit against Apple that resultedfrom a car crashed caused by the use of FaceTime while driving. They also discuss howforeseeable use of apps can increase liability for companies. Full Podcast Transcript NASIR: Hi and welcome to Legally Sound Smart Business! I’m Nasir Pasha. MATT: And I’m Matt Staub. Two attorneys…

January 5, 2017

The guys kick in the new year by first discussing Cinnabon’s portrayal of Carrie Fisher as Princess Leia soon after her death, as well as other gaffes involving Prince and David Bowie. They alsotalk about right of publicity claims companies could be held liable for based on using someone’s name or likeness for commercial gain.

December 22, 2016

Nasir and Matt discuss the recent incidentat a Victoria’s Secret store where the store manager kicked out all black women after one black woman was caught shoplifting. They then each present dueling steps businesses should take when employees are accused of harassment.

December 8, 2016

Nasir and Matt return to talk about the different types of clients that may have outstanding invoices and how businesses can convert unpaid bills to getting paid.

November 10, 2016

After a long break, Nasir and Matt are back to discuss a Milwaukee frozen custard stand that is now revising it’s English only policy for employees. The guys also discuss how similar policies could be grounds for discrimination and what employers can do to revise their policies.

October 6, 2016

The guys discuss the new California law that allows actors to request the removal of their date of birth and birthdays on their IMDB page and why they think the law won’t last. They also discuss how age discrimination claims arise for business owner.

September 29, 2016

Nasir and Matt discuss the racial discrimination claims surroundingAirbnb and how it’s handled the situation. They also discuss some practical tips for businesses experiencing similar issues.

September 8, 2016

Nasir and Matt discuss whyAmazon seller accounts are getting suspended and banned without notice and how business owners can rectify this situation through a Corrective Action Plan.

August 25, 2016

Nasir and Matt talk about the accusations surroundingfashion giant Zararipping off the designs of independent artists like Tuesday Bassen and howsmaller companies can battle the industry giants.

August 18, 2016

Nasir and Matt discuss Brave Software’s ad replacing technology that has caught the eye of almost every national newspaper and has a potential copyright infringement claim looming. They also welcome digital marketing expert Matt Michaelree to speak on the specifics of what Brave is attempting to do and whether it has the answers moving forward.

July 28, 2016

Nasir and Matt discuss the sexual harassment lawsuit filed by Gretchen Carlson against Fox CEO Roger Ailes. They also talk aboutthe importance of sexual harassment training and properly handling such allegations in the office.

July 15, 2016

Nasir and Matt talk about the changes at Starbucks that have led to many disgruntled employees and customers.

June 23, 2016

Nasir and Matt discuss the criminal charges facing FedExinvolving the alleged transportation of illegal drugs. They also talk about how business owners should address working with customers that may be breaking the law.

June 15, 2016

The guys return after a long break to discuss why Yahoo is auctioning off over 3,000 patents and how this decision will affect the longevity of the company.

May 25, 2016

Nasir and Matt discuss the increase in the salary thresholdfor exempt employees and how employerscan try to avoid paying overtime as a result.

May 18, 2016

Nasir and Matt discuss the Baltimore law that makes it very difficult to operate food trucks in the city. They also discuss all the legal restrictions tohaving a food truck.

May 11, 2016

Matt listens to Nasir recap the developing battle in his hometown of Vandalia, Ohio over whether a Dunkin Donuts can move into a location in close proximity to a local favorite donut shop. They then discusswhether the issue is more legal or personal.

May 9, 2016

The guys kick off the week by discussing a Nevada employee who is claiming she was fired for not supporting the Scientology beliefs of her employer.

April 27, 2016

The guys discuss the massive floods in Houston,how employers responded, and why one meteorologist became a local hero. They also discuss the steps businesses should take in preparing for storms outside the workplace.

April 20, 2016

The guys discuss the boycott of Amazon over the products of an unnamed presidential candidate. They also talkabout how a business should handle a boycott and whether it’s possible to exit one unscathed.

April 13, 2016

Click here to read HubSpot’s response on this topic. Nasir and Matt discuss the trend in startups to compensate programmers and other early employees with stock options and how the company culture at HubSpot isn’t what it seems.

April 6, 2016

Nasir and Matt discuss various lawsuits against social media platforms in which users are accused of artificially inflating their social currency.

We represent businesses.
That’s all we do.

Oh, and we love it.

We love our work. We love reviewing that lease for your new location. We thrive on closing that acquisition that nearly fell through. We’re fulfilled when we structure a business to grow, raise capital, and be legally protected.

We focus on developing close relationships with our clients by being like business partners. A partner who provides essential, personalized, proactive legal support.

We do all of this without utilizing the traditional billable hour model. You pay for the value we bring, not the time spent on calls, emails, and meetings.

Our team is made up of attorneys and staff that share these values and we are retained by clients who want the same.

Pasha Law PC operates in the states of California, Illinois, New York, and Texas.

Meet Our Team

Fractional General Counsel Services

Pasha Law Select offers the expertise of a high-end general counsel legal team for every aspect of your business at a fixed monthly rate. Pasha Law Select is deliberately designed to allow our legal team to be proactive, to anticipate, and to be comprehensive in serving our clients. To be great lawyers, we need to know our clients. We can’t know our clients unless we represent a select number of clients in the long-term. This is Pasha Law Select.

Learn More