Archive for the ‘You’ve Got To Be Kidding’ Category
Businesses and Jobs Leaving California include:
CKE Restaurants, Inc.
Claim Jumper and Bubba Gump Shrimp Co.
eBay Inc. and PayPal
FedEx National LEL
Hyundai Capital America
J.C. Penney Co.
PETCO Animal Supplies Stores, Inc.
Raytheon Space and Airborne Systems
The Top Ten Reasons Why California Companies Are Calling the Moving Companies
by Joseph Vranich
The Business Relocation Coach
* Revised April 2011 *
#10 – Unprecedented Energy Costs: The California Manufacturers and Technology Association states that commercial electrical rates here already are 50% higher than in the rest of the country. However, a law enacted in April 12, 2011 requires utilities to get one-third of their power from renewable sources (e.g., solar panels, windmills) within nine years. Look for costs to increase by another 19% in many places to a whopping 74% in Los Angeles. Such new burdens along with upcoming regulations stemming from the “California Global Warming Solutions Act” set potentially overwhelming obstacles to companies here as they try to meet competition based in other states and in foreign nations.
#9 – Severe Tax Treatment: The Tax Foundation in their 2011 State Business Tax Climate Index lists California at No. 49 for tax fairness. CFO Magazine ranked California the worst state for tax treatment. The Council on State Taxation ranks California as the only state to receive a D- grade (the lowest grade). Last year the National Conference of State Legislatures said California remains the number one state in raising taxes – raising them higher than any other state that increased taxes in 2009.
#8 – Worst Regulatory Burden: The consulting firm Bain & Co. constructed a “regulatory hassle index” that found “California is far worse than any other state by a very significant margin.” The finding was echoed by Development Counselors International that found that 72% of surveyed corporate executives listed California as having the “worst business climate” in the entire United States. The newest survey, released in March 2011, found that 87.7% of California executives who also operate in several states say California is a harder place to do business than anywhere else. The survey, by the California Foundation for Commerce and Education, found that among the other 12.3%, not one executive said it’s easier doing business in California.
#7 – Dreadful Legal Treatment: The Civil Justice Association of California said the state ranks 44th in legal fairness to business. Los Angeles was again named the least fair and reasonable litigation environment in the entire country.
#6 – Most Expensive Business Locations: The Rose Institute of State and Local Government reported in its 2010 survey that California cities continue to be some of the most expensive locations to do business in the United States. That was confirmed by the Milken Institute, which found that California businesses are paying 23% more than the national average just to operate here.
#5 – Provable Savings Elsewhere: Again Bain & Co. found that more than half of California business leaders – an astonishing 60% – said their policy is to restrict job growth in the state or move jobs to other U.S. locations. Some companies are quite open about this, like Intel, which has said it will never build another plant in California, and McAfee in 2010 admitted it intentionally avoids hiring in California and saves about 30 to 40% every time it hires outside of the state.
#4 – Downright Unfriendly: The Small Business & Entrepreneurship Council in Virginia found that California ranked 49th overall in terms of business friendliness. That was echoed in February 2010 when The Mercatus Center at George Mason University ranked California 48th in economic, regulatory and personal freedoms in the 50 states.
#3 – Uncontrollable Spending: Extravagant spending causes California to now have the lowest credit rating of any state. The American Legislative Exchange Council points out: “Despite the dubious distinction of having both the highest statewide personal income tax and the highest state sales tax in the nation, California still finds itself with far and away the largest budget deficit of any state.”
#2 – Excessively Adversarial: For two years in a row Chief Executive magazine found California to be the worst state in the nation in which to do business. Said one CEO, “California is terrible. Even when we’ve paid their high taxes in full, they still treat every conversation as adversarial. It’s the most difficult state in the nation.” The magazine calls California the “Venezuela of North America.”
#1 – The ‘Outpouring’ of Poor Rankings Continues: California ranked dead last in the latest Pollina Corporate Top 10 Pro-Business States for 2010 study. The finding was based on a composite of labor-related factors, business and personal taxes, the litigation environment, demographics, crime rates, school dropout rates, lifestyle and a multitude of other issues. There is little evidence that California’s business environment will improve considering that that the legislature in 2011 has voted down litigation reform, tax-increase plans are underway, and a host of new regulations are to be implemented that will increase costs for literally every business.
The enforcement division of the National Oceanic and Atmospheric Administration’s (NOAA) seized an 881 pound because they said that Carlos Rafael did not catch the fish in a way allowed by the registered permit.
The tuna must be caught by rod and wheel, not by a net. Rafael and his crew were using nets to catch bottom-dwellers when they caught the giant tuna. Rafael stated, “We didn’t try to hide anything. We did everything by the book. Nobody ever told me we couldn’t catch it with a net.” He has purchased 15 tuna permits over the past four years. He even immediately called a “bluefin tuna hot line” to report his catch. “I wanted to sell the fish while it was fresh instead of letting it age on the boat.”
In January 2011, a 342 kg (754 lb) bluefin tuna was sold at the Tsukiji fish market in Tokyo for a record 32.49 million Yen (US$396,000). This would value this rare tuna at approximately $460,000.
Who was right?
Did Carlos Rafael break the law? Or did the US Government leverage its power to profit from the labor of another man?
Was Carlos Rafael arrested for a crime?
The 881-pound bluefin tuna was said to be sold on consignment overseas and the proceeds from the sale of the fish will be held in an account pending final resolution of the case.
“The matter is still under investigation. If it’s determined that there has been a violation, the money will go into the asset forfeiture fund.” – Monica Allen, Deputy Director with NOAA Fisheries.
No charges have been filed yet, but Rafael will likely get a warning, according to reports.
“What are we supposed to do?” Rafael asked. “They said they were going to give me a warning,” Rafael said. “I think I’m going to surrender all my tuna permits now. What good are they if I can’t catch them?”
You’ve Got To Be Kidding…
It takes at least 2 Lawyers, 3 years, 20 Correspondences, and 21 Professors to decide that drinking water cannot be sold as a way to combat dehydration. And if anybody dares sell water claiming that it is effective against dehydration they could get into serious legal trouble.
Dr. Moritz Hagenmeyer (Attorney at Law, Hamburg: Specializes in Intellectual Property Law and Food Law) and Dr. Andreas Hahn (Research Assistant, Free University of Berlin: Specializes in German and European Economic, Competition and Energy Law), are German professors who submitted a report in February 2011 (View Report).
From the Report Abstract:
The Panel on Dietetic Products, Nutrition and Allergies was asked to deliver an opinion on the scientific substantiation of a health claim related to water and reduced risk of development of dehydration. The scope of the application was proposed to fall under a health claim referring to disease risk reduction. Water, which is the subject of the health claim, is sufficiently characterized. The claimed effect is “regular consumption of significant amounts of water can reduce the risk of development of dehydration.”
Dehydration is a condition of body water depletion. The Panel notes that the proposed risk factors, “water loss in tissues” or “reduced water content in tissues,” are measures of water depletion and thus are measures of the disease. The Panel considers that the proposed claim does not comply with the requirements for a disease risk reduction claim pursuant to Article 14 of Regulation (EC) No 1924/2006. © European Food Safety Authority, 2011.
The 21 Gun Salute:
Dehydration is defined as a shortage of water in the body, but the European Food Standards Authority decided the statement could not be allowed. The ruling, announced in November 2011 after a conference of 21 EU-appointed scientists in Parma and which means that bottled water companies cannot claim their product stops people’s bodies drying out, was given final approval this week by European Commission President Jose Manuel Barroso. And under British law, advertisers who make health claims that breach EU law can be prosecuted and face two years in jail.
What Brussels Does Best:
United Kingdom Independence Party and Member of the European Parliament Paul Nuttall said: “I had to read this four or five times before I believed it. It is a perfect example of what Brussels does best. Spend three years, with 20 separate pieces of correspondence before summoning 21 professors to Parma, where they decide with great solemnity that drinking water cannot be sold as a way to combat dehydration. Then they make this judgment law and make it clear that if anybody dares sell water claiming that it is effective against dehydration they could get into serious legal bother.”
“Easy money with the help of the courts is bound to attract opportunists.” – David Warren Peters, CEO and General Counsel of Lawyers Against Lawsuit Abuse
The Americans with Disabilities Act (ADA) was passed July 26, 1990 as Public Law 101-336 and became effective on January 26, 1992. The ADA is federal legislation that opens up services and employment opportunities to Americans with disabilities. The law was written to strike a balance between the reasonable accommodation of citizens’ needs and the capacity of private and public entities to respond. It is intended to eliminate illegal discrimination and level the playing field for disabled individuals.
California Citizens Against Lawsuit Abuse reports, “the Americans with Disabilities Act was meant to increase access for disabled people, but a few unscrupulous personal injury lawyers and professional plaintiffs have made fortunes by targeting businesses for shake down lawsuits. These lawsuits don’t ask for any accessibility improvements to be made, they ask for money to make the lawsuit go away.”
California, along with Hawaii, Illinois and Florida, is a particular hotbed for ADA lawsuits and the law firms that bring them to court. California has one of the largest amount of ADA lawsuits in the country, citing several factors for potential abuse, chief among them two California statutes that provide $1,000 or $4,000 in minimum damages, plus attorney fees, per each successful claimant. Many claimants multiply these damage amounts by the number of conditions they observe at a property. This frequently results in $50,000 or more in damage demands. Some serial claimants will file for damages against dozens of businesses they say they have visited on the same day or for repeated visits to an establishment.
Jarek Molski was disabled in a 1985 motorcycle accident that left him a paraplegic. He has filed 400 lawsuits against businesses under the Americans with Disabilities Act, alleging access violations. He was dubbed a “hit-and-run plaintiff” in 2004 by a federal judge and barred from filing any more lawsuits.
Molski’s attorney, Thomas Frankovich, says his client and the dozen or so serial ADA plaintiffs his firm has represented are activists and crusaders. Frankovich dubbed Molski (who does not have a criminal record) “the sheriff” because “he started going into town to clean it up.” Frankovich says he has filed 223 ADA lawsuits on behalf of Molski. Frankovich says Molski began suing only after his letters to offending businesses were ignored. Says Frankovich: “Letters don’t work. Only the hammer of litigation gets them to do what they need.”
But Frankovich himself is being charged by the state bar of California on three counts of misconduct, stemming from ADA lawsuits he filed on behalf of Molski. One count alleges that Frankovich’s litigation strategy amounted to a “scheme to extort money from defendants.” Says Frankovich of the charge: “It’s an absolute fabrication based on absolutely no supportive facts. Using the fact that he filed 223 lawsuits as evidence of a scheme is absurd. His rights were violated in 223 cases where significant architectural barriers existed.”
Disabled plaintiffs in cases like this will team up with a trial attorney. The disabled person will go out to restaurants and other public facilities to specifically look for access violations. The trial attorney will file a lawsuit on his behalf. The location owner may then be looking at over $100,000 in repair costs and legal fees.
After the suit has been filed, the attorney in league with the disabled person would call up the owner and arrange for a $5000 to $10,000 out of court settlement to make the lawsuit go away. It would often cost much more to fight the lawsuit than to pay the settlement, so the location owner will often pay the money to make the lawsuit go away.
California State Senator Bob Dutton reports that emergency legislation which would have stopped these predatory lawyers from filing frivolous lawsuits against small businesses was killed by Democrats during a Senate Judiciary Committee hearing on July 5, 2011.
While Dutton’s bill honored the ADA laws already in place, Dutton said, “Senate Bill 783 would have required the owner of a property to be notified of an Americans With Disabilities Act (ADA) violation before a lawsuit could be filed.” The property owner would have had 120 days to fix the violation. If the violation(s) was not fixed within the time frame, a lawsuit would then be allowed to move forward.”
Donald Shoenholt and Hy Chabbott, owners of Gillies Coffee Company, had a coffee bean roasting plant on 19th St in New York City. The coffee company was established in 1840. This is the year that Antarctica was discovered by Charles Wilkes, Samuel Morse patented the telegraph and William H. Harrison was elected as President of the United States.
In 2002, a city inspector dropped by on an anonymous tip. The inspector issued a $400 fine for “fugitive odors in an industrial area.” The business was ordered to eliminate all coffee odors in the future.
At the city’s Environmental Control Board administrative hearing, Donald stated, “Research has shown that coffee smells like coffee. There is nothing that can reasonably be done to separate the natural small of already roasted coffee from a coffee business. Under the current interpretation [of the NYC Air Pollution Control Code], shoe stores, barber shops, doctor’s offices and flower shops are all in violation of the law.”
Gillies Coffee Company was convicted of the violation on April 2, 2003, and the company accrued $30,000 in legal bills. According to the Philadelphia Inquirer, NYC’s Department of Environmental Protection has also fined pickle companies, bagel bakeries and doughnut shops for air quality violations.
“It’s odd that a company would voluntarily dilute its business in the most populous state in the country simply because it’s being asked to collect what is lawfully owed.” – Mark Hedlund, a spokesman for Senate President Pro Tem Darrell Steinberg.
Republican Senator Bob Dutton: Rancho Cucamonga, CA on AB 28X
Amazon CEO Jeff Bezos on California Affiliate Nexus Sales Tax Law
On June 29, 2011, California Governor Jerry Brown signed CA State Bill AB 28X into law. This law, also known as the California Affiliate Nexus Tax, “imposes a tax on retailers… from the sale of tangible personal property sold at retail in this state.” The law specifically includes Internet activity performed by a person who is in the State of California.
Brown signed the measure into law as part of his plan to reduce the state’s budget gap. The California State Board of Equalization expects to increase government revenue by $200 million a year. Brown and some lawmakers responded to critics by saying the measure levels the playing field for California’s brick-and-mortar retailers, which are required to collect sales taxes.
Amazon.com, Overstock.com and other online retailers responded to this new law by terminating all relationships with all affiliates who work in California.
An official letter sent by Amazon to its California affiliates stated:
“We oppose this bill because it is unconstitutional and counterproductive… Similar legislation in other states has led to job and income losses, and little, if any, new tax revenue.”
Other states that have passed the so-called “Amazon tax” in recent years include Connecticut, Illinois, New York, North Carolina, Arkansas and Rhode Island. Amazon has dropped the affiliate program in all these states, except New York, where it has filed a lawsuit against the state.
The business environment is an always changing obstacle course. Experienced business leaders, and, in this case, successful Amazon affiliates have already reacted to this government created problem. Instead of getting mad or breaking the law, they simply closed their businesses in California and relocated to a more business friendly state, like Texas, Nevada or Arizona.
As a result of this new tax law, California-based online entrepreneur, Nick Loper, relocated to Nevada. Loper has been quoted to say that 70 other affiliates had already left.
Another online entrepreneur, Erica Douglass, posted a mock “It’s Over” letter to California on her blog. Douglass, who sold an internet company she had built for $1.1 million in 2007 when she was just 26, cited multiple reasons for moving to Austin, Texas. Among them were unnecessary paperwork requirements mandated by the state and high taxes. However, the straw that broke the camel’s back was Brown signing the Amazon Tax into law.