Understanding the new 2023 California Privacy Rights ACT (CPRA) – discussion by attorneys Maureen Duffy and Christopher Nepacena of the Donahue Fitzgerald Firm

I have provided below a screenshot of page 1, and a full pdf copy of Understanding The California Privacy Rights Act (CPRA): A Brief Overview With Regards To Employees, written by attorneys Maureen Duffy and Christopher Nepacena of the Donahue Fitzgerald firm. I like the paper because it is short but detailed and to-the-point on important provisions. Of course, for your situation you will need to go into greater detail and you also might need professional help and advice. I included the screenshot of page 1 to give you an idea of how the paper is written, and so that you can quickly see that some of the CPRA provisions might well be uncertain or subject to interpretation. Please click on the pdf for the full paper, and seek legal and other professional help and advice.

The following is a screenshot of page 1:

The following is the full pdf of the article:

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Thank you for viewing. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved.

David Tate, Esq. (and inactive CPA)

  • Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
  • Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
  • Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
  • Mediator and facilitating dispute resolution:
    • Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
    • Business, breach of contract/commercial, owner, shareholder, investor, etc.
    • D&O, board, audit and governance committee, accountant and CPA related.
    • Other: workplace and employment, environmental, trade secret.

Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.

Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that does not mean that I do not or that I might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.

Please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

My two blogs are:

http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com

Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com

David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.

Can the 14TH Amendment really be used to resolve the debt ceiling issue?

The following is a summary of the 14TH Amendment to the Constitution (Amendment XIV) from https://www.senate.gov, followed by the text of the 14TH Amendment. Can the 14TH Amendment really be used to address and resolve the debt ceiling issue? Perhaps, but I am not seeing it. The issue certainly would go up to the Supreme Court. As with any use or attempted use of authority, the user (or reporter as the case might be) should be prepared to cite and to support the actual specific authority or the relevant part of the authority, and the specific source of the specific authority, and the specific authorization to use the specific authority as it is intended to be used in the current situation.

The following is the summary from http://www.senate.gov:

Landmark Legislation: The Fourteenth Amendment


Image: page one of the Fourteenth Amendment

Passed by the Senate on June 8, 1866, and ratified two years later, on July 9, 1868, the Fourteenth Amendment granted citizenship to all persons “born or naturalized in the United States,” including formerly enslaved people, and provided all citizens with “equal protection under the laws,” extending the provisions of the Bill of Rights to the states. The amendment authorized the government to punish states that abridged citizens’ right to vote by proportionally reducing their representation in Congress. It banned those who “engaged in insurrection” against the United States from holding any civil, military, or elected office without the approval of two-thirds of the House and Senate. The amendment prohibited former Confederate states from repaying war debts and compensating former slave owners for the emancipation of their enslaved people. Finally, it granted Congress the power to enforce this amendment, a provision that led to the passage of other landmark legislation in the 20th century, including the Civil Rights Act of 1964, and the Voting Rights Act of 1965. Congress required former Confederate states to ratify the Fourteenth Amendment as a condition of regaining federal representation.

The following is the text of the 14TH Amendment to the Constitution (Amendment XIV):

Section 1

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.


Section 2

Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice-President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age, and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State.


Section 3

No person shall be a Senator or Representative in Congress, or elector of President and Vice-President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.


Section 4

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.


Section 5

The Congress shall have the power to enforce, by appropriate legislation, the provisions of this article.

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Regards, and best to you,

David Tate, Esq.

Thank you for reading. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved.

David Tate, Esq. (and inactive CPA)

  • Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
  • Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
  • Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
  • Mediator and facilitating dispute resolution:
    • Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
    • Business, breach of contract/commercial, owner, shareholder, investor, etc.
    • D&O, board, audit and governance committee, accountant and CPA related.
    • Other: workplace and employment, environmental, trade secret.

Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.

Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that doesn’t mean that I don’t or might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.

Please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

My two blogs are:

http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com

Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com

David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.

INSTANCES OF POSSIBLE DEFAMATION PRESENT COMPLICATED ISSUES OF LAW, FACT, AND EVIDENCE . . .

Instances of possible defamation present complicated issues of law, fact, (admissible) evidence, judge and juror views, etc. – for example, consider 1 and 2 below, and some of the possible issues.

1.  If third party person or a victim alleges that someone else committed a wrongdoing, in what circumstances can that constitute a defamatory statement against the alleged wrongdoer?

2.  When the alleged wrongdoer denies the allegations, in what circumstances can that denial constitute a defamatory statement against the person who made the allegation?

– For both 1 and 2, we need to evaluate the words that were used, and the venue and circumstances relating to how and where the words were published and disseminated.

– Are the words defamatory or not? What is “defamation” – very generally and broadly: a false statement of purported or deemed fact (v. opinion), that is made about a person to a third party (published), if the statement is unprivileged, is negligently, recklessly or intentionally made, and results in and causes damage to the person’s reputation.  

– Is the statement false? Is the statement negative? Truth is a defense to defamation.

– Are the words of fact or of opinion or of something other than fact, or perhaps over-generalizations or substantially true?

– Are the words oral (slander) or written (libel)? Different rules apply to each.

– Is the person a public person/figure or a limited-purpose public person/figure?

– Is the subject matter of the statement at issue because of something that the person said?

– Is the statement or the manner or venue in which it was published unprivileged?

– Is the statement topic or subject matter of public or common interest?

– Is the statement classified as per se defamatory or per quod? Different rules apply to each.

– Does the statement cause damages to the person – general or special damages?

– Consider other defenses that might apply, if any.

– Consider which person(s) have the burdens of proof.

– Consider the culpability or degree of wrongful intent that must be established.

– Consider whether other possible areas of law, duties and rights might be relevant or involved, such as privacy, for example.

– On all issues we need to know the evidence that is obtainable and that is admissible at trial.

Instances of possible defamation (and other possible areas such as privacy) present complicated issues of law, fact, (admissible) evidence, judge and juror views, etc. . . . .

* * * *

Regards, and best to you,

David Tate, Esq.

Thank you for reading. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved.

David Tate, Esq. (and inactive CPA)

  • Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
  • Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
  • Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
  • Mediator and facilitating dispute resolution:
    • Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
    • Business, breach of contract/commercial, owner, shareholder, investor, etc.
    • D&O, board, audit and governance committee, accountant and CPA related.
    • Other: workplace and employment, environmental, trade secret.

Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.

Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that doesn’t mean that I don’t or might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.

Please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

My two blogs are:

http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com

Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com

David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.

Federal Reserve SVB Report – Briefly

I have provided below a link to the Federal Reserve Report re SVB. The Report is 118 pages. I have briefly reviewed the report, but have not studied it. Suffice it to say that the Report is very critical. The following is the first paragraph from the initial Report summary:

You can read the entire report yourself (see below). The Report discusses several failures. Globally these are issues of risk management, governance, diligence, legal compliance, investigation, audit, and business judgment – my reference to “audit” in this sentence is as a process or activity that people of all positions do generally (and not to the specific external or internal audit functions).

When reading the report, you should also keep in mind that from a legal perspective, a failure or a negative event does not by itself necessarily result in entity liability or individual liability for the event or for the damages that resulted if proven. Authority, duty, rights, breach of duty, causation, and damages are complicated issues of law, fact and (admissible) evidence that need to be investigated, discovered, evaluated, and adjudicated (or mediated or otherwise settled) on a case-by-case basis.

At least for now I have decided to not get into the weeds and to not discuss the Report in detail item-by-item. However, for your reading below I have provided the full Federal Reserve Report:

* * * *

Regards, and best to you,

David Tate, Esq.

Thank you for reading. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved.

David Tate, Esq. (and inactive CPA)

  • Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
  • Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
  • Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
  • Mediator and facilitating dispute resolution:
    • Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
    • Business, breach of contract/commercial, owner, shareholder, investor, etc.
    • D&O, board, audit and governance committee, accountant and CPA related.
    • Other: workplace and employment, environmental, trade secret.

Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.

Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that doesn’t mean that I don’t or might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.

Please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

My two blogs are:

http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com

Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com

David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.

We have many issues, problems and uncertainties for which using a risk management processes is the only solution . . .

I considered writing a longer discussion explaining my reason for this post, but then decided otherwise as a short comment should suffice.

We are at, and have been at, a point where some people are having difficulty engaging in discourse, discussions and debate about pressing and sometimes very difficult issues, topics and disagreements, and, making matters worse or more difficult, some people are using this scenario to create divisions, or for power and control, or to encourage ongoing delay and deadlock, or to avoid, or to make, options, compromise or working together, and solutions more difficult, delayed or impossible to achieve.

A constructive, conscious decision and movement is needed to encourage the pendulum to swing back in the other direction when people are constructively interacting, discussing, debating and even proclaiming.

To be clear, I am not advocating for or even suggesting limitations on discourse, debate and disagreement – instead, I am advocating for just the opposite and for more debate and openness, just in a different manner, and for people to learn and to recognize when the discourse, debate and disagreement is based on or turns into fallacies, errors or mistakes, generalities, personal attacks or branding, or misrepresentations and even fraud – if you take notice, you might well see some of these daily – these situations seem to be feeding on themselves, and need to be constructively encouraged in the other direction.

Taking a risk management approach or process would help to focus on the issues at hand, possible options and solutions. It is my belief that taking a risk management approach or process is the only solution in some or perhaps many of these situations. Unfortunately, as an argument in opposition, by some people an effort toward a risk management approach or process would be labeled or branded as surrender or capitulation (hint: nothing in a risk management approach or process says surrender or capitulate – instead, strength always is or can be advantageous). The following is a slide for one possible risk and uncertainty management process approach – you might find it useful, or at least worthwhile for discussion purposes.

I have also provided below my slightly revised definition of governance slide.

I have also provided below Questions to Consider to Help Facilitate Dispute Resolution and Settlement – I hope that you find it helpful.

* * * *

Regards, and best to you,

David Tate, Esq.

Thank you for reading. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved.

David Tate, Esq. (and inactive CPA)

  • Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
  • Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
  • Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
  • Mediator and facilitating dispute resolution:
    • Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
    • Business, breach of contract/commercial, owner, shareholder, investor, etc.
    • D&O, board, audit and governance committee, accountant and CPA related.
    • Other: workplace and employment, environmental, trade secret.

Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.

Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that doesn’t mean that I don’t or might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.

Please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

My two blogs are:

http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com

Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com

David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.

Could It Be Fraud? – Consider Civil Jury Instructions To Evaluate

There are different criteria for different types of fraud and fraudulent intent or conduct. Thus, for example, I have pasted below some of the California Civil Jury Instructions (“CACI”) relating to allegations of fraud, including CACI Nos. 1900-1908. You might not be aware that there are types of fraud in which intentional lying in the statement or representation is not a required element.

CACI No. 1900 pertains to intentional misrepresentation; however CACI Nos. 1901-1908, respectively, relate to concealment, false promise, negligent misrepresentation, opinions of statements of fact, definition of important fact/promise, misrepresentations made to persons other than the plaintiff, reliance, and reasonable reliance.

There are also other types and definitions or elements of fraud or fraudulent intent or conduct that might be applied depending on the specific facts of the case – such as, for example, scienter under the federal securities laws, or the Model Civil Jury Instructions for the District Courts of the Ninth Circuit, etc.

Briefly, on a related but different topic that is relevant and that will become more relevant – consider someone using AI to produce materials. Apparently, or at least I have read, that in its current development AI produced materials are or might be reliable but only to a certain extent, and they can contain entirely erroneous or unsupported materials or statements.

However, for the purpose of this post I have pasted below only CACI Nos. 1900-1908, as those instructions will provide you with a good introduction to this topic. The following are CACI Nos. 1900-1908, in which you can fill in the blanks for possible different types of fraud and fraudulent intent or conduct.

1900. Intentional Misrepresentation

[Name of plaintiff] claims that [name of defendant] made a false representation that harmed [him/her/nonbinary pronoun/it]. To establish this claim, [name of plaintiff] must prove all of the following:

1. That [name of defendant] represented to [name of plaintiff] that a fact was true;

2. That [name of defendant]’s representation was false;

3. That [name of defendant] knew that the representation was false when [he/she/nonbinary pronoun] made it, or that [he/she/nonbinary pronoun] made the representation recklessly and without regard for its truth;

4. That [name of defendant] intended that [name of plaintiff] rely on the representation;

5. That [name of plaintiff] reasonably relied on [name of defendant]’s representation;

6. That [name of plaintiff] was harmed; and

7. That [name of plaintiff]’s reliance on [name of defendant]’s representation was a substantial factor in causing [his/her/nonbinary pronoun/its] harm.

New September 2003; Revised December 2012, December 2013

1901. Concealment

[Name of plaintiff] claims that [he/she/nonbinary pronoun] was harmed because [name of defendant] concealed certain information. To establish this claim, [name of plaintiff] must prove all of the following:

[1. (a) That [name of defendant] and [name of plaintiff] were [insert type of fiduciary relationship, e.g., “business partners”]; and

[1. (b) That [name of defendant] intentionally failed to disclose certain facts to [name of plaintiff];]

[or]

[1. That [name of defendant] disclosed some facts to [name of plaintiff] but intentionally failed to disclose [other/another] fact[s], making the disclosure deceptive;]

[or]

[1. That [name of defendant] intentionally failed to disclose certain facts that were known only to [him/her/nonbinary pronoun/it] and that [name of plaintiff] could not have discovered;]

[or]

[1. That [name of defendant] prevented [name of plaintiff] from discovering certain facts;]

2. That [name of plaintiff] did not know of the concealed fact[s];

3. That [name of defendant] intended to deceive [name of plaintiff] by concealing the fact[s];

4. That had the omitted information been disclosed, [name of plaintiff] reasonably would have behaved differently;

5. That [name of plaintiff] was harmed; and

6. That [name of defendant]’s concealment was a substantial factor in causing [name of plaintiff]’s harm.

New September 2003; Revised October 2004, December 2012, June 2014, June 2015

1902. False Promise

[Name of plaintiff] claims [he/she/nonbinary pronoun] was harmed because [name of defendant] made a false promise. To establish this claim, [name of plaintiff] must prove all of the following:

1. That [name of defendant] made a promise to [name of plaintiff];

2. That [name of defendant] did not intend to perform this promise when [he/she/nonbinary pronoun] made it;

3. That [name of defendant] intended that [name of plaintiff] rely on this promise;

4. That [name of plaintiff] reasonably relied on [name of defendant]’s promise;

5. That [name of defendant] did not perform the promised act;

6. That [name of plaintiff] was harmed; and

7. That [name of plaintiff]’s reliance on [name of defendant]’s promise was a substantial factor in causing [his/her/nonbinary pronoun/its] harm.

New September 2003; Revised December 2012, December 2013

1903. Negligent Misrepresentation

[Name of plaintiff] claims [he/she/nonbinary pronoun/it] was harmed because [name of defendant] negligently misrepresented a fact. To establish this claim, [name of plaintiff] must prove all of the following:

1. That [name of defendant] represented to [name of plaintiff] that a fact was true;

2. That [name of defendant]’s representation was not true;

3. That [although [name of defendant] may have honestly believed that the representation was true,] [[name of defendant]/he/she/nonbinary pronoun] had no reasonable grounds for believing the representation was true when [he/she/nonbinary pronoun] made it;

4. That [name of defendant] intended that [name of plaintiff] rely on this representation;

5. That [name of plaintiff] reasonably relied on [name of defendant]’s representation;

6. That [name of plaintiff] was harmed; and

7. That [name of plaintiff]’s reliance on [name of defendant]’s representation was a substantial factor in causing [his/her/nonbinary pronoun/its] harm.

New September 2003; Revised December 2009, December 2013

1904. Opinions as Statements of Fact

Ordinarily, an opinion is not considered a representation of fact. An opinion is a person’s belief that a fact exists, a statement regarding a future event, or a judgment about quality, value, authenticity, or similar matters. However, [name of defendant]’s opinion is considered a representation of fact if [name of plaintiff] proves that:

[[Name of defendant] claimed to have special knowledge about the subject matter that [name of plaintiff] did not have;] [or]

[[Name of defendant] made a representation, not as a casual expression of belief, but in a way that declared the matter to be true;] [or]

[[Name of defendant] had a relationship of trust and confidence with [name of plaintiff];] [or]

[[Name of defendant] had some other special reason to expect that [name of plaintiff] would rely on the defendant’s opinion.]

New September 2003; Revised April 2004, May 2020

1905. Definition of Important Fact/Promise Revoked December 2013 See CACI No. 1908, Reasonable Reliance (below).

1906. Misrepresentations Made to Persons Other Than the Plaintiff

[Name of defendant] is responsible for a representation that was not made directly to [name of plaintiff] if [he/she/nonbinary pronoun/it] made the representation [to a group of persons including [name of plaintiff]] [or] [to another person, intending or reasonably expecting that it would be repeated to [name of plaintiff]].

New September 2003

1907. Reliance

[Name of plaintiff] relied on [name of defendant]’s [misrepresentation/concealment/false promise] if:

1. The [misrepresentation/concealment/false promise] substantially influenced [him/her/nonbinary pronoun/it] to [insert brief description of the action, e.g., “buy the house”]; and

2. [He/She/Nonbinary pronoun/It] would probably not have [e.g., bought the house] without the [misrepresentation/concealment/false promise].

It is not necessary for a [misrepresentation/concealment/false promise] to be the only reason for [name of plaintiff]’s conduct.

New September 2003; Revised December 2013

1908. Reasonable Reliance

In determining whether [name of plaintiff]’s reliance on the [misrepresentation/concealment/false promise] was reasonable, [he/she/ nonbinary pronoun/it] must first prove that the matter was material. A matter is material if a reasonable person would find it important in deciding what to do.

If you decide that the matter is material, you must then decide whether it was reasonable for [name of plaintiff] to rely on the [misrepresentation/ concealment/false promise]. In making this decision, take into consideration [name of plaintiff]’s intelligence, knowledge, education, and experience.

However, it is not reasonable for anyone to rely on a [misrepresentation/ concealment/false promise] that is preposterous. It also is not reasonable for anyone to rely on a [misrepresentation/concealment/false promise] if facts that are within [his/her/nonbinary pronoun] observation show that it is obviously false.

New September 2003; Revised October 2004, December 2013, May 2020

* * * * *

Regards, and best to you,

David Tate, Esq.

Thank you for reading. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved.

David Tate, Esq. (and inactive CPA)

  • Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
  • Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
  • Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
  • Mediator and facilitating dispute resolution:
    • Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
    • Business, breach of contract/commercial, owner, shareholder, investor, etc.
    • D&O, board, audit and governance committee, accountant and CPA related.
    • Other: workplace and employment, environmental, trade secret.

Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.

Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that doesn’t mean that I don’t or might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.

Please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

My two blogs are:

http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com

Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com

David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.

An officer’s oversight duty – In Re McDonald’s Corporation Stockholder Derivative Litigation – Court of Chancery of the State of Delaware

I have pasted below select wording from the Opinion in In Re McDonald’s Corporation Stockholder Derivative Litigation in which the Court held that a corporate officer has an oversight duty (the entire Opinion is 65 pages). In Re McDonald’s Corporation Stockholder Derivative Litigation, Court of Chancery of the State of Delaware, C.A. No. 2021-0324-JTL (January 25, 2023). The Opinion has already resulted in an amount of discussion, and will continue to do so; however, it is my view that the Opinion expresses a view that has been coming step-by-step for a considerable time. This is a developing area of law – the holding in In Re McDonald’s Corporation Stockholder Derivative Litigation will be variously followed, disagreed with, differentiated, or expanded upon in future cases, and in other jurisdictions.

The following is select wording from the Opinion in In Re McDonald’s Corporation Stockholder Derivative Litigation – I have provided you with specific wording so that you can read for yourself – and officers of corporations, whether incorporated in Delaware, or in California, or in some other jurisdiction, should kept this Opinion in mind in addition to the business judgment rule, risk management, compliance and compliance programs, entity controls, Dept. of Justice compliance program guidance, specific areas of liability for which officers have already been held personally liable (e.g., environmental contamination, and food safety), and the like. Below the following quoted language I have also provided a complete pdf of the Opinion in In Re McDonald’s Corporation Stockholder Derivative Litigation.

Generally, following the approach in In Re McDonald’s Corporation Stockholder Derivative Litigation, (1) evaluate whether you have the requisite corporate officer status or standing; and if you do, (2) have you evaluated and considered your area(s) of responsibility and control; (3) have you made an effort or has an effort been made to consider, design, implement and monitor risk management and entity controls and compliance programs in those areas as believed relevant and necessary; and/or (4) are there relevant red flags of which you are aware (or perhaps about which someone in hindsight might argue that you should have been aware)? Obviously such an approach also raises other important issues and questions at law.

The following is quoted from In Re McDonald’s Corporation Stockholder Derivative Litigation * * * * *

            6. The Scope Of An Officer’s Oversight Duty

            For the reasons previously discussed, officers owe duties of oversight comparable to those of directors. But that does not mean that the situational application of those duties will be the same. “Although the fiduciary duty of a Delaware director is unremitting, the exact course of conduct that must be charted to properly discharge that responsibility will change in the specific context of the action the director is taking with regard to either the corporation or its shareholders.” Malone v. Brincat, 722 A.2d 5, 10 (Del. 1998). The same is true for officers, who regularly operate in different contexts than directors.

            Most notably, directors are charged with plenary authority over the business and affairs of the corporation. See 8 Del. C. § 141(a). That means that “the buck stops with the Board.” In re Del Monte Foods Co. S’holders Litig., 25 A.3d 813, 835 (Del. Ch. 2011). It also means that the board has oversight duties regarding the corporation as a whole.

            Although the CEO and Chief Compliance Officer likely will have company-wide oversight portfolios, other officers generally have a more constrained area of authority. With a constrained area of responsibility comes a constrained version of the duty that supports an Information-Systems Claim.12 For example, the Chief Financial Officer is responsible for financial oversight and for making a good faith effort to establish reasonable information systems to cover that area. The Chief Legal Officer is responsible for legal oversight and for making a good faith effort to establish reasonable information systems to cover that area. The executive officer in charge of sales and marketing is not responsible for the financial or legal reporting systems. And of course, the board can tailor the officers’ obligations and responsibilities.

            For similar reasons, officers generally only will be responsible for addressing or reporting red flags within their areas of responsibility, although one can imagine possible exceptions. If a red flag is sufficiently prominent, for example, then any officer might have a duty to report upward about it. An officer who receives credible information indicating that the corporation is violating the law cannot turn a blind eye and dismiss the issue as “not in my area.”

            Another important question is the standard of liability for officers. As with directors, officers only will be liable for violations of the duty of oversight if a plaintiff can prove that they acted in bad faith and hence disloyally.

            As scholars have chronicled, Delaware’s oversight jurisprudence has evolved from the original Caremark decision, where the oversight duty could sound in both loyalty or care, to a strictly loyalty-based regime. 13 The corporation in Caremark had an exculpatory provision that eliminated director liability for breaches of the duty of care. After noting that the failure to ensure that a corporation information and reporting system existed could, “under some circumstances . . . render a director liable for losses caused by non-compliance with applicable legal standards,” Chancellor Allen observed in a footnote that “questions of waiver of liability under certificate provisions authorized by 8 Del. C. § 102(b)(7) may also be faced.” Caremark, 698 A.2d at 970 & n.27. That comment only makes sense if, in the absence of an exculpatory provision, a breach of the duty of care could support an otherwise actionable claim. Other references in the decision also acknowledged that a breach of the duty of care could lead to a failure of oversight.14

            In another portion of the opinion, however, Chancellor Allen expressed his view that a pure breach of the duty of care, absent conduct that rose to the level of bad faith, should not support a monetary damages award:

Indeed, one wonders on what moral basis might shareholders attack a good faith business decision of a director as “unreasonable” or “irrational”. Where a director in fact exercises a good faith effort to be informed and to exercise appropriate judgment, he or she should be deemed to satisfy fully the duty of attention. If the shareholders thought themselves entitled to some other quality of judgment than such a director produces in the good faith exercise of the powers of office, then the shareholders should have elected other directors. 15

It is possible to read this passage as indicating that a breach of the duty of care should never support liability, whether as an oversight claim or otherwise.

            Writing as a member of this court, Chief Justice Strine took up this aspect of Caremark and held that director liability for oversight claims always requires a showing of bad faith. See Guttman v. Huang, 823 A.2d 492, 506 (Del. Ch. 2003). In Stone, the Delaware Supreme Court adopted the Guttman formulation and stated that a breach of the duty of loyalty, such as acting in bad faith, was a “necessary condition to liability.” Stone, 911 A.2d at 364; see Banbridge, supra, at 595. After Stone, then-Vice Chancellor Strine acknowledged that Caremark duties carried overtones of care, but explained that “to hold directors liable for a failure in monitoring, the directors have to have acted with a state of mind consistent with a conscious decision to breach their duty of care.” Desimone v. Barrows, 924 A.2d 908, 935 (Del. Ch. 2007). After becoming the Chief Justice, he authored a Delaware Supreme Court decision that made a similar statement: “If Caremark means anything, it is that a corporate board must make a good faith effort to exercise its duty of care. A failure to make that effort constitutes a breach of the duty of loyalty.” Marchand v. Barnhill, 212 A.3d 805, 824 (Del. 2019).

            There is room to debate whether the same loyalty-based framework that governs directors should apply to officers, or whether officers could be held liable for a failure of oversight caused by a breach of the duty of care.16 To state a care-based claim, a plaintiff would have to plead and later prove that the oversight failure resulted from gross negligence. For purposes of Delaware entity law, a showing of gross negligence requires conduct akin to recklessness.17

            The arguments about the oversight regime that should apply to officers parallel the arguments about whether an officer’s duty of care should resemble the director regime and require a showing of gross negligence, or whether it should track the agency regime and require only simple negligence. Scholars engaged in extensive debate on that topic.18

            The arguments in favor of a less protective standard for officers generally start from the observation that, while directors are part-time monitors who may meet a handful of times per year, officers are full-time employees who are deeply involved in corporate decision-making on a daily basis. Compared to directors, officers have greater knowledge about and responsibility for the areas under their control. They also receive significantly higher levels of compensation for doing their jobs. The arguments in favor of a more protective standard for officers generally rely on the same justifications that support the business judgment rule, including the risk of hindsight bias in judicial decision-making, the relative incompetence of judges in assessing business decisions, the disproportionate level of liability that an individual could face from harm to a large enterprise, the bluntness of liability as a tool for shaping behavior, and a concern that the threat of liability will cause good people to decline to serve. See, e.g., Petrin, supra, at 460–73. Chancellor Allen highlighted some of those arguments in Caremark, when he observed that “a demanding test of liability in the oversight context is probably beneficial to corporate shareholders as a class, as it is in the board decision context, since it makes board service by qualified persons more likely, while continuing to act as a stimulus to good faith performance of duty by such directors.” 698 A.2d at 971.

            When faced with this type of policy decision, Delaware courts generally view the latter set of considerations as more persuasive and opt for a more protective standard. For example, a comparatively recent series of decisions have adopted the director model for analyzing officers’ duty of care.19 Similar policy rationales about protecting directors and officers against unjustified lawsuits, and the importance of encouraging capable people to serve, drive Delaware’s broad construction of advancement and indemnification rights.20

            A recent event with potential implications for officers’ oversight duties is the statutory amendment authorizing limited exculpation for officers. Historically, officers have not been entitled to exculpation, rendering them subject to liability for the duty of care. See Gantler, 965 A.2d at 709 n.37. Effective August 1, 2022, the General Assembly amended Section 102(b)(7) of the DGCL to authorize corporations to exculpate officers for care-based liability for direct claims by stockholders. Del. S.B. 273, 151st Gen. Assem., 83 Del. Laws ch. 377 (2022). The amendment did not authorize exculpation for “any action by or in the right of the corporation.” Id.

            The bifurcated approach taken by the amendment might imply a legislative intent to preserve care-based liability for officers for derivative claims, including for breaches of the duty of oversight. But that is not the only inference. Claims for breaches of fiduciary duty generally focus on actions or decisions that a fiduciary has taken affirmatively. Although Delaware authorities regularly equate action and conscious inaction,21 humans intuitively distinguish between the two and associate greater culpability with an affirmative act rather than a conscious decision not to act.22 The amendment to Section 102(b)(7) can be read as preserving care-based liability for officers when they act in a grossly negligent (i.e., reckless) manner. It need not be read to suggest an intent to override the loyalty-based premise of oversight liability for officers and preserve care-based liability in that area.

            This decision concludes that oversight liability for officers requires a showing of bad faith. The officer must consciously fail to make a good faith effort to establish information systems, or the officer must consciously ignore red flags.

End of quoted wording from the Opinion in In Re McDonald’s Corporation Stockholder Derivative Litigation * * * * *

The following is a pdf of the complete Opinion in In Re McDonald’s Corporation Stockholder Derivative Litigation.

* * * * *

Regards, and best to you,

David Tate, Esq.

Thank you for reading. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved.

David Tate, Esq. (and inactive CPA)

  • Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
  • Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
  • Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
  • Mediator and facilitating dispute resolution:
    • Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
    • Business, breach of contract/commercial, owner, shareholder, investor, etc.
    • D&O, board, audit and governance committee, accountant and CPA related.
    • Other: workplace and employment, environmental, trade secret.

Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.

Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that doesn’t mean that I don’t or might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.

Please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

My two blogs are:

http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com

Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com

David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.

Understanding the basics of employee personnel files – forwarding from Weintraub Tobin

I have provided below a link to a video (YouTube) from California law firm Weintraub Tobin discussing personnel files – this is a good discussion for every employer to know and to be mindful of, or simply to review, and also can relate to workplace and employer/employee compliance, risk and liability management, privacy, and perhaps even some aspects of ESG.

It should not be necessary for me to add; however, the video and discussion apply only to California people, situations and entities, and only to California law. Please also see my limitations and disclaimer below – and, I am not associated with Weintraub but am merely forwarding their video.

* * * * * * *

Regards, and best to you,

David Tate, Esq.

Thank you for reading. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved.

David Tate, Esq. (and inactive CPA)

  • Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
  • Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
  • Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
  • Mediator and facilitating dispute resolution:
    • Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
    • Business, breach of contract/commercial, owner, shareholder, investor, etc.
    • D&O, board, audit and governance committee, accountant and CPA related.
    • Other: workplace and employment, environmental, trade secret.

Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.

Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that doesn’t mean that I don’t or might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.

Please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

My two blogs are:

http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com

Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com

David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.

David Tate, Esq. – mediator and dispute resolution services

Dear Connections and Others: 

I am making this post to discuss my services as a mediator. I provide reasonably priced mediator and dispute resolution services, in addition to my litigation practice. Toward the end of 2022 I started to expand my mediator practice to about 20% of my practice. I provide services in California only.

My services as mediator have primarily been in the following litigation: trust, estate, elder abuse, conservatorship, POA, accounting, contentious administration, real property, breach of contract, commercial, and internal business, co-owner, board/director/committee, shareholder, founder, investor, and workplace cases and disputes. I also have experience in other areas. 

Please feel free to contact me informally to discuss mediation and dispute resolution opportunities generally or a specific case or situation where a mediator is required or could simply be helpful. I like helping people get to settlement, answers, resolution and moving forward.    

My current rates are the following (although I have flexibility in some cases): 

Remote/zoom mediations: current standard mediator rate: $300 per hour plus a $200 setup fee, to be apportioned between the parties. 

In person mediations: current standard mediator rate: $300 per hour plus a $200 setup fee, to be apportioned between the parties – plus a per party room cost of approximately $60 per hour (or less if possible).   

You will find some of my mediator discussions on my blogs in addition to other posts (see blog addresses below).

     Recent blog posts on http://californiaestatetrust.com: mediation tips video, Gordon v. Ervin Cohen & Jessup LLP. 

     Recent blog posts on http://tateattorney.com: SV Bank, internal audit, California mental health. 

Thank you. Again, please also feel free to contact me informally. Email: dave@tateattorney.com

Thank you for reading. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved.

* * * * * * *

Best to you, David Tate, Esq. – Email: dave@tateattorney.com

David Tate, Esq. (and inactive CPA)

  • Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
  • Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
  • Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
  • Mediator and facilitating dispute resolution:
    • Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
    • Business, breach of contract/commercial, owner, shareholder, investor, etc.
    • D&O, board, audit and governance committee, accountant and CPA related.
    • Other: workplace and employment, environmental, trade secret.

Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.

Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that doesn’t mean that I don’t or might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.

Please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

My two blogs are:

http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com

Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com

David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.

Silicon Valley Bank – what’s the plan and looking for answers, or looking for answers and what’s the plan . . . ?

Silicon Valley Bank – what’s the plan and looking for answers, or looking for answers and what’s the plan . . . ?

March 14, 2023, update: the Federal Reserve Board has announced that Vice Chair for Supervision Michael S. Barr is leading a review of the supervision and regulation of Silicon Valley Bank, with the review to be publicly released by May 1. Tate comments – that sounds like a fairly quick review – perhaps it will not be as in-depth.

In some ways this post is strangely similar to a recent December 8, 2022, post pertaining to FTX (Fallout from FTX (and continuing) https://tateattorney.com/2022/12/08/fallout-from-ftx-and-continuing/

Obviously the FTX and Silicon Valley Bank situations are different. Any yet, in both situations many financially sophisticated people, depositors, savers, and investors have lost or will lose money (some a lot of money), or have otherwise been caught up in the collapse. Below are some of my comments currently.

The chorus is the same: what’s the plan and looking for answers, or looking for answers and what’s the plan . . . . (and also how could this happen, and who is to blame, of course)?

Just because something unexpected or negative or bad happens does not by itself mean that someone is legally at fault or liable for wrongdoing or loss, or that there were related reliance, causation, damages, etc. We need more information to evaluate the issues – obviously there needs to be an in-depth investigation (or investigations) by qualified investigators, which presumably is (or are) already in progress. Civil lawsuits will be filed for money damages. Is there a possibility of criminal claims – it is too early to evaluate or to know.

Post-collapse actions, representations and statements also will be evaluated. In the FTX situation significant post-collapse interviews and public statements were made (ill-advisedly in my view) (and apparently without an attorney present, and perhaps without sufficient pre-interview or statement preparation, and possible agreed-upon procedures, questions, and assurances, and possible post-interview review, input and authorization procedures).

The people who are already caught up or who might become caught up in this wear many different hats and hold different positions.

It is also sounding like there might be or already is a need for governmental leadership to publicly provide reassurance (with specifics and evidence, not generalities) about the integrity, safety, trustworthiness, fairness, and governmental oversight and regulation of the banking system and institutions, investment system and institutions, and entity controls and processes.

As the comments and accusations start slinging, remember that being caught up in the situation does not by itself mean or establish legal fault or liability for wrongdoing or loss (i.e., authority, duty, breach, causation, liability, damages, mitigation, etc.) – possible hats and being caught up in the situation include the following people and possible others:

  • CEO (obviously);
  • CFO (obviously);
  • Other CxOs;
  • Board/directors, and possible committees (i.e., audit, governance, risk) (obviously);
  • People who are in SVB’s financial and banking risk function;
  • Possible people within SVB who directly or indirectly acted or did not act;
  • Possible people within SVB who made or who did not make representations;
  • Possible people who directly or indirectly took or obtained related money or assets;
  • Possible people who sold or liquidated SVB stock or other positions;
  • Possible other entities and people who became directly or indirectly involved;
  • External independent auditors – this is a complicated evaluation, for example: what services were retained and were performed, what standards and procedures applied and/or were or perhaps should have been performed, what “opinions” or other reports were provided, what was known, what was unknown, what perhaps should have been known, who was entitled to rely, causation, etc.;
  • General counsel – historically generally not; however, potential general counsel exposure has been expanding in certain circumstances, possibly such as for red flags, entity controls, and related diligence;
  • Internal auditors – historically generally not; however, internal audit/auditors were recently disciplined in the Wells Fargo Bank situation;     
  • Celebrity endorsers (if any) – see my prior post pertaining to FTX https://tateattorney.com/2022/11/23/ftx-cryptocurrency-celebrity-endorser-liability-exposure-in-the-news/;
  • Insurers;
  • Regulators (such as where were they and what were they doing or not doing in all of this);
  • Investor/investment entities and/or advisors or representatives;
  • Other banks and lenders, possible guarantors;
  • Investors (including the “investment small” people who are really at possible unrecoverable loss);
  • Customers, depositors, and savers (including the “financially small” people who are really at possible unrecoverable loss);
  • Possible third-party entities with which SVB contracted;
  • Professional licensing entities; and
  • More: possibly/probably more.

Thank you for reading. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved.

* * * * * * *

Best to you, David Tate, Esq.

David Tate, Esq. (and inactive CPA)

  • Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
  • Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
  • Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
  • Mediator and facilitating dispute resolution:
    • Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
    • Business, breach of contract/commercial, owner, shareholder, investor, etc.
    • D&O, board, audit and governance committee, accountant and CPA related.
    • Other: workplace and employment, environmental, trade secret.

Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.

Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that doesn’t mean that I don’t or might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.

Please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

My two blogs are:

http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com

Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com

David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.