Indiana Business Law Blog

Homeowners’ Associations and Election Signs

October 5, 2018 | Michael R. Smith

A few weeks ago, we hired a contractor to do some painting at our house. As many contractors do, he put a sign in our yard while he was there. He didn’t ask us for permission, but if he had we would have given it to him. A few days later, in fact after the painter and his sign were gone, we received a nastygram from our homeowner’s association informing us that our covenants prohibit any signs in the yard other than a sign advertising the property for sale. I noticed that there is no exception for political signs, and I wondered why we had not received a nastygram a few years ago when we put a candidate’s sign in our yard before an election.

I now know the answer to that, thanks to a recent Face Book post from my friend, Greg Purvis, an attorney at Spangler, Jennings, & Dougherty, P.C.

Greg pointed out that Indiana law, specifically Ind. Code § 32‑21‑13‑4,* prohibits homeowners’ associations from adopting or enforcing rules prohibiting certain types of signs on a homeowner’s property from thirty days before an election until five days after an election. It applies only to signs that meet one or more of the following descriptions:

History of the Johnson Amendment

October 2, 2018 | Michael R. Smith

The Johnson Amendment, which has been in the news from time to time for the last couple of years, is sometimes described as prohibiting tax exempt churches from campaigning for candidates for elected office. That is accurate, but it applies more broadly than to churches. No organization is eligible for tax exempt status under Section 501(c)(3) of the Internal Revenue Code if it

participate[s] in, or intervene[s] in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

Last year, the President signed Executive Order 13798 that directed the Secretary of the Treasury to:

Defend Trade Secrets Act: Are Your Employment Agreements Up to Date?

September 3, 2018 | Michael R. Smith

Until recently, almost all trade secret law was furnished by state law, not federal law. Absent federal diversity jurisdiction, lawsuits for misappropriation of trade secrets had to be brought in state court. Even though the vast majority of states (including Indiana) have adopted the Uniform Trade Secrets Act (“UTSA”), there are nonetheless variations in trade secret law from one state to another. However, in May 2016 President Obama signed the Defend Trade Secrets Act (or “DTSA”), creating at 18 U.S.C. § 1836 a new federal civil cause of action for misappropriation of trade secrets. Even so, the federal statute does not pre-empt state law, and state causes of action under the UTSA remain viable.

Definitions of Trade Secret and Misappropriation

Two crucial components of trade secret law are the definitions of trade secret and misappropriation. The DTSA definitions, found at 18 U.S.C. § 1839, are not identical to the familiar UTSA definitions, but there are no major surprises. At least for the most part, information that is a trade secret under the UTSA is also a trade secret under the DTSA, and vice versa. Similarly, there are likely very few acts that qualify as misappropriation under one statute but not the other.

Revised Policy on the Use of Unpaid Interns

August 21, 2018 | Michael R. Smith

We previously discussed whether nonprofit organizations and for-profit businesses can use unpaid interns without violating the Fair Labor Standards Act (or FLSA). We also discussed allegations of violations of the FLSA related to unpaid interns in the fashion industry.

Earlier this year, the Department of Labor revised its policy, known as Fact Sheet #71, for determining whether businesses may use unpaid interns. The old 2010 policy used a six-factor test, with the presence of all six factors required in order for businesses to use unpaid interns without violating the FLSA. The new 2018 policy considers the following seven factors to determine whether the business or the intern is the primary beneficiary of the internship.

The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.

Business Contact Basics: Preambles

March 22, 2018 | Michael R. Smith

This begins an occasional series of posts on basics of business contracts, principles that apply broadly to most types of business and commercial contracts, regardless of the subject — merger agreements, stock purchase agreements, asset purchase agreements, construction contracts, professional service contracts, generic independent contractor agreements, advertising agency agreements, software and other intellectual property licenses, publishing contracts, equipment leases, office and retail property leases, procurement contracts (both master agreements and single-purchase agreements), employment contracts, and others. Although there can be a subtle legal distinction between a “contract” and an “agreement,” I will use terms interchangeably.

Let’s start at the beginning, with the preamble clause, the first paragraph that appears after the title of most business and commercial contract. There is no universally recognized name for that part of a contract, but preamble is a good descriptive name. Here’s an example:

This Consulting Agreement (“Agreement”), dated March 22, 2018, is between John J. Doe, an individual with a place of business located at 3650 N Washington Blvd Indianapolis, IN 46205 (dba J.J. Doe Consulting) (“Consultant”) and Jane Roe & Associates, LLC, an Indiana limited liability company (“Client”).

Indiana Business Entity Harmonization: Postscript

March 3, 2018 | Michael R. Smith

We previously discussed the Business Entity Harmonization Bill (Senate Enrolled Act 443 or P.L. 118-2017) passed last year by the General Assembly in the following posts:

Part I — an introduction.
Part II — a discussion of IC 23‑0.5, the Uniform Business Organizations Code.

That Time When the Indiana Government Nearly Came Apart at the Seams

March 1, 2018 | Michael R. Smith

“In that remote and despotic period, when the sovereign king chartered rights and liberties to his subjects – the people – all governmental powers were assumed to be his by divine right. In him were combined the legislative, executive and judicial powers of government. He was the lawgiver, interpreter and enforcer. When the powers were executed by agents, the agents were his, and responsible to him alone. On this continent we came to the time when the people, by revolution, took to themselves sovereignty, and in exercising supreme political power chartered governments by written constitutions. These organic instruments declared and guaranteed the rights and liberties of the individual, which had come to the people through centuries of struggle against absolutism in government. The majority was to rule, but under restraints and limitations which preserved to the minority its rights. ‘By the constitution which they establish, they not only tie up the hands of their official agencies, but their own hands as well; and neither the officers of the State, nor the whole people as an aggregate body, are at liberty to take action in opposition to this fundamental law.’ Cooley, Const. Lim. (7th ed.) 56.”

Ellingham v. Dye, 178 Ind. 336, 342; 99 N.E. 1, 3 (1912).

When I was in law school more than 25 years ago, I ran across the 1912 decision of the Indiana Supreme Court quoted above. It fascinated me because, at least as I understood the context, it decided a question that brought Indiana to the brink of a constitutional crisis. The case involves an attempt by the Indiana Governor and the General Assembly to amend the Indiana Constitution without complying with the procedures prescribed by the Constitution itself. At the time I thought I might return to the case some day and write an article about it, but I never got around to it.

Indiana Business Entity Harmonization: Part IV

January 3, 2018 | Michael R. Smith

[March 3, 2018. The General Assembly amended some of the provisions created the Business Entity Harmonization Bill, as discussed in a Postscript to this series.]

This is the last in four-part series. The first three parts are here: here, here, and here.

This Part IV describes some flaws of Senate Enrolled Act 443 that we ran across while writing the first three parts. We hope the General Assembly will address them, either in the 2018 session or another.

Indiana Business Entity Harmonization: Part III

January 2, 2018 | Michael R. Smith

[March 3, 2018. The General Assembly amended some of the provisions created the Business Entity Harmonization Bill, as discussed in a Postscript to this series.]

This is the third of a four-part series discussing the Business Entity Harmonization Bill passed by the Indiana General Assembly in 2017. The first two parts are here and here.

Senate Enrolled Act 443 creates, effective as of January 1, 2018, a new Article 0.6, the Uniform Business Organization Transactions Code, in Title 23 of the Indiana Code. In previous versions of the statute, provisions dealing with mergers, conversions, and domestications of business corporations, limited liability companies (LLCs), limited partnerships (LPs), limited liability partnerships (LLPs), and nonprofit corporations were scattered across several articles of Title 23. The Uniform Business Organization Transactions Code gathers most of them into one article that, in general, applies at least as broadly as each corresponding provision of the former statute, and in some cases more broadly. In addition, the new article provides for the acquisition of ownership interest (i.e., stock in a corporation or interest in a partnership or LLC) by another entity.

Indiana Business Entity Harmonization: Part II

January 1, 2018 | Michael R. Smith

[March 3, 2018. The General Assembly amended some of the provisions created the Business Entity Harmonization Bill, as discussed in a Postscript to this series.]

This is the second of a four-part series discussing the Business Entity Harmonization Bill passed by the Indiana General Assembly in 2017. An overview of the bill is provided in Part I.

Senate Enrolled Act 443 creates, effective as of January 1, 2018, a new Article 0.5 in Title 23 of the Indiana Code, the Uniform Business Organizations Code, that includes a number of provisions that apply to Indiana business corporations (including professional corporations and benefit corporations, but excluding insurance companies), limited liability companies (LLCs, including series LLCs), limited partnerships (LPs), limited liability partnerships (LLPs), and nonprofit corporations, eliminating a number of inconsistencies between similar provisions for different types of entities. The following discussion is a brief description of some of the more important provisions, drawing attention to new or substantially changed provisions.

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