Snyder Obtains Dismissal of $71 Million Lawsuit Against Actuary

John H. Snyder PLLC won a complete victory on behalf of client Actuarial Risk Consultants LLC (ARC), a New Jersey actuarial firm.

In early 2015, ARC was sued by Leading Insurance Group (LIG), a financially troubled insurance company.  LIG asserted claims against ARC for professional malpractice and unjust enrichment, both claims arising from LIG's contention that ARC failed to detect problems with LIG's own internal actuarial work.  ARC denied all wrongdoing and asserted that LIG, in bringing this lawsuit, was seeking to shift the blame for its own mismanagement.

On March 7, 2016, New York Supreme Court Justice Saliann Scarpulla dismissed all claims against ARC, holding that LIG had failed to allege a viable cause of action.  While ARC is disappointed that LIG chose to assert this meritless action, ARC is pleased to have received complete vindication in the New York courts.

Yippy Launches Into Space With Globalstar Deal

Data technology company Yippy, Inc. (YIPI:OTC) has entered the global data space race by entering into a long-term agreement with Globalstar, Inc. (GSAT).

Historically, satellite internet and data service has been limited by slow download speeds. Yippy, which holds a perpetual license to IBM Watson Explorer technology, has developed its EASE 360 software solution that dramatically increases satellite data performance. In order to leverage this unique capability, Yippy has entered into a 20-year agreement with Globalstar, a leading provider of low earth orbit satellite voice and data communications.

The agreement enables Yippy to bring its customers industry leading satellite internet service, in addition to giving Yippy exclusive rights to sell Yippy’s EASE 360 Platform to Globalstar’s nearly 700,000 subscribers. Yippy also receives colocation rights with respect to 20% of Globalstar’s 26 ground stations worldwide. Yippy will utilize its access to the Globalstar network to provide affordable broadband-like internet access to locations not served by terrestrial internet - which includes more than 4 billion people around the world.

Yippy was advised in this transaction by Thomas C. Sima and John H. Snyder.   We congratulate Rich Granville, John Macartney, and everyone at Yippy on this remarkable deal.  

Snyder Sworn Into the U.S. Supreme Court Bar

It was my privilege to be sworn into the bar of the United States Supreme Court on June 15, 2015.

Together with several of my fellow Harvard Law alumni, we had the opportunity to watch the Court issue three decisions and, later in the morning, visit with Chief Justice John Roberts and Justice Ruth Bader Ginsburg.

As a trial attorney, being sworn into the bar of the U.S. Supreme Court before the full panel of Justices was a profoundly special and memorable experience (and produced child-like excitement rarely felt after age 10).  I thank Chuck Sims and Abaigeal Van Deerlin for graciously sponsoring my admission, and Pete Mumma of the Harvard Law School Alumni Relations Office for organizing this wonderful event.

 

 

Snyder Advises Yippy on Deal With Globalstar

John H. Snyder PLLC client Yippy, Inc. has reached an agreement with Globalstar, Inc. to build out a global ubiquitous network utilizing the Yippy EASE 360 platform. This network will allow Globalstar customers to access online information as well as corporate data silos with enhanced download and upload speeds with a focus on primary content. The EASE 360 platform significantly enhances the customer experience such that web pages and content downloads/uploads are materially faster while maintaining a secure connection.

Based in Fort Myers, Florida, Yippy, Inc. (www.yippyinc.com) is a technology company that specializes in the development of search-based applications, data normalization and aggregation through enterprise application (app) service environments (EASE) for consumer and enterprise markets. Yippy's proprietary appliance based product suites are deployed over a private cloud architecture and provide secure, redundant and maintained data services for individuals, businesses and education markets. The Company also operates several online web properties and educational reference portals. Investors can find current financial disclosure for the Company at http://www.otcmarkets.com/stock/YIPI/filings.

John H. Snyder PLLC advised Yippy in connection with this transaction.  See full press release here.

Appellate Court sides with Snyder client Wear First, enforcing arbitration agreements against factoring agent.

On May 26, 2015, a New York appellate court sided with Wear First Sportswear, Inc. in a dispute with a third-party factoring agent that claimed Wear First owed one of its clients money under a factoring agreement.

Wear First sought dismissal of the case, brought by Plaintiff DS-Concept Trade Invest LLC, on the basis that all of the agreements on which DS-Concept was relying contained broad arbitration clauses requiring the matter to be arbitrated in China.

In response, DS-Concept contended that a 1984 decision of the New York appellate court created a special rule that factoring agents do not have to comply with arbitration clauses contained in contracts that have been assigned to the factoring agent.

The New York Supreme Court, First Department Appellate Division, confirmed the long-standing rule in New York that when a party is assigned a contract, the assignee merely steps into the shoes of the assignor (and gains no greater or different rights). In the case of DS-Concept v. Wear First, the appellate court reversed the lower court, holding that an assignee (DS-Concept) must abide by an arbitration agreement contained in a contract that was allegedly assigned. In so holding, the appellate court rejected its decision from three decades earlier, Rosenthal v. Kunstadt, 106 A.D.2d 277 (1st Dep't 1984)) which previously had been construed as creating a different rule for factoring agents.

Wear First was represented by John H. Snyder and Abaigeal Van Deerlin.

Read the decision here.

Investor Beware: Nine Tips to Avoid Getting Scammed

The world is full of ambitious people with big ideas. Unfortunately, often the big idea is to separate you from your money. Don't get scammed.

If you're considering making a significant investment in a start-up or early stage company, follow these nine tips to avoid becoming a victim:

1.    Understand the business plan.  

You need to understand the business you are investing in. If you don't understand it, don't invest in it.

Before you think about writing a check, ask:

  • What is the company going to do with your money?
  • Does the company have enough money to do what it says it's going to do?
  • What does the company sell?
  • Who is going to buy?
  • Who is competing in this market?
  • How does the company make money?
  • When do you get to see some profits?
  • If the company succeeds, when do you get to sell your equity?

The business plan should make sense to you. If it doesn't make sense, don't assume that you're not smart enough to "get it." Here's a secret - most business plans don't really make sense when you dig into them. That's why most new business ventures fail.

Again, if you don't understand it, don't invest in it. 

2.    Don’t get stampeded into investing before you're ready.  

Show me a guy who is insisting that you've got to invest RIGHT NOW, and I'll show you a scam. Promoters of legitimate ventures will encourage you to take your time, consult your lawyer, and ask questions. They should want to have savvy, sophisticated investors as part of their circle. If a business wants your investment today, it will probably want it in two weeks.

It's your money. Invest it when you're ready and not a moment before.

3.    Talk to other investors.  

Ask the promoter to put you in touch with other investors. Pick up the phone and have a conversation. Here are a few questions to get you started:

  • How do you know the promoter?
  • Can you tell me about the business?
  • When did you invest?
  • Do you have common stock (or membership units)?  Preferred?  If preferred, what are the differences between common and preferred?
  • What about this company convinced you to invest?

If the promoter won't let you talk to other investors, or if the other investors seem sketchy, run away!

4.    Talk with the Company's lawyer.  

If an emerging company is taking money from investors, it should have a lawyer. Ask for the name of the lawyer, and ask permission to call him or her. Then, really call. The purpose is to find out some valuable information:

  • Does the lawyer really exist?
  • Is the lawyer a bona fide experienced attorney with a deep background in business?
  • Do you get a good vibe from the attorney?

Nothing can kill a start-up faster than incompetent legal advice. Even if all of the other fundamentals are good, a company with poorly drafted corporate documents and agreements is a disaster waiting to happen. If the company does not have capable and reputable legal counsel that is a big red flag.

5.    Ask common-sense questions.  

When a promoter tells you about the fabulous returns his venture is going to earn, ask some common-sense questions:

  • Why haven't 100 other companies rushed into this market?
  • Why haven't the big private equity firms snapped up this deal?
  • Why doesn't the promoter simply borrow the needed funds from a bank, so that he only has to pay interest and can keep the fantastic profits for himself?

Scammers tell stories that you want to believe. Sometimes the best question is: "why do I deserve this generosity?"

6.  Don't get shamed into investing.

The scam artist's best trick is often to make you feel insecure. If you ask an uncomfortable question, the scammer will make you feel naive and foolish for asking such a "silly" question. It is human nature to crave the admiration and approval of others. No one wants to be thought a rube. Scam artists prey upon basic human nature. 

Always remember, when someone wants your money, you get to ask any questions you want. If you get the sense that the promoter is trying to make you feel stupid for asking questions, you're probably about to get scammed.

7.  Resist "Fear of Missing Out."

We've all heard the stories (many apocryphal) of the guy who passed on an opportunity to be an early investor with Warren Buffett. Or Sam Walton. Or Bill Gates. And yes, sometimes that probably happens.

Scammers prey upon this fear. They’ll convince you that this is a “once in a lifetime” chance to get rich. They want to create a sense of psychological urgency - that sense of: "Oh my God, this will change my life!" Before long, in your fantasy, you're already spending the profits. 

When you start to feel that sensation in the depths of your soul, CHECK YOURSELF! Most scams, in retrospect, are painfully obvious. (That Nigerian prince who just needed $10,000 to unlock $100 million? Yeah, I guess that did seem a little fishy.) Scams work because they cause your brain to shut off for just long enough to write a check. 

Resist the fear of missing out and you'll probably avoid getting scammed.

8.    Meet the promoter in person.  

For God's sake, don't invest based on a phone call, or worse, an email. Meet the promoter in person. Have lunch or a drink. Talk to him and find out what his story is. Have him tell you about himself. Does the story make sense? Does he know the kinds of things that a person with his background ought to know? Do you get a good vibe? Do you trust him?

This is not 100% fool proof because scammers are quite persuasive. However, in my experience, if you use a meeting to tease out a lot of biographical information, it will put you in a position to go back, do some more diligence, and see if the guy checks out.

9.    Engage a smart business lawyer to kick the tires.

If you're going to invest a meaningful amount of money, paying for a few hours of a lawyer's time can save you from a very expensive mistake. You want a lawyer who has seen a lot of deals, who has the capability to investigate the promoter and make inquiries into his background and reputation, and who knows how to spot a scam. It's amazing the number of successful people who invest without legal counsel. 

Don't be one of them. Follow the above steps and chances are good you can avoid getting taken by a charlatan peddling fools gold.

 

If you're considering making an investment in a private company and want to enlist experienced counsel to help you kick the tires (or if you're worried you've already gotten scammed), call John H. Snyder (212-856-7280) or Thomas C. Sima (212-796-6661).

Five Tips for Avoiding Partnership Disputes

I represent clients involved in highly contentious disputes with their business partners. Partnership disputes are personal, expensive, and terrible for business. They are to be avoided if at all possible. In the hope of helping entrepreneurs avoid partnership disputes, I offer these five tips.

1. Choose your partners wisely.

The worst mistake an entrepreneur can make is choosing a bad business partner. Having a dishonest, disloyal, or unreliable business partner is sheer misery. Getting rid of a bad partner is expensive and often requires litigation.  The best advice: don't partner with someone you don't know.

The best way to avoid partnership disputes is to avoid doing business with a bad partner.

Many clients profess to have an innate ability to size up a person's character. I am skeptical. In my experience, people who make judgments on "gut instinct" often see what they want to see. The decision of who to partner with is far too important to wing it.

I recommend that clients engage counsel to conduct an investigation of a potential business partner before signing the partnership agreement. Does your prospective partner have a criminal record? Has he been sued? What is his background? What do his former business associates say about him?

You can avoid a great deal of heartburn by avoiding the wrong partner.

2. Get your partnership agreement right.

Business partners should enter into a written agreement governing their venture. Depending on the structure, this might be an LLC operating agreement, a partnership agreement, a joint venture agreement or a shareholder's agreement.  

Sit down with your prospective partner and make sure your partnership agreement fully states the terms of your agreement.

Too often, entrepreneurs approach partnership agreements as a mere formality. "Just give me a standard partnership agreement," I am sometimes asked. There is no such thing as a "standard" agreement. Poorly drafted partnership agreements frequently lead to disputes among business partners. Before signing a partnership agreement, it is wise to have a frank discussion with your partner about the terms of your agreement. Make sure you and your partner are truly on the same page. This can be an uncomfortable conversation. However, if you and your prospective partner are not truly in agreement, far better to know before you go into business.  

3. Observe business formalities.

Business partners who are working well together will often adopt a relaxed, informal way of dealing with one another. While natural, this is a dangerous way to do business. 

Partnership disputes often result from partners failing to adhere to standard business formalities.

Partners sometimes conduct business according to informal, ad hoc "understandings" that are not reflected in the partnership agreement. Business partners might get away with this for a while. However, when things become contentious, informal arrangements lead to litigation.

Similarly, managing partners often become somewhat casual about providing minority partners with financial information. The perception that management is withholding information often sows the seeds of future conflict. Many partnership disputes can be avoided by scrupulously observing business formalities.

4. Share the credit.

Partnerships can be ruined when one partner refuses to acknowledge the contributions of the other partner.

Sharing credit with your partners will help to avoid resentments that often lead to bigger problems.

Few things strain a partnership more than when one partner insists on hogging the credit for the company's accomplishments. I have seen successful companies go through destructive litigation all because one partner insisted on diminishing the other partner's role in the company.

As a company grows, a majority owner can avoid many problems by making a habit of saying "we did this" instead of "I did this." On the other hand, if a partner feels slighted, the rift can quickly turn into open hostility. Always remember, partnership litigation is very expensive; a few generous words are free, and they can go a long way toward maintaining good partnership relations.

5. Beware success.

Ironically, it is success - not failure - that leads to many partnership disputes.

Partners can avoid the perils of success by anticipating and openly addressing the anxieties that come with prosperity.

As a company becomes larger and more successful, the need to establish clear lines of authority can bring to the surface disagreements regarding ultimate decision-making authority. Likewise, if the venture is making a lot of money, there are incentives for a majority owner to squeeze out the minority owners.

When a venture achieves a degree of success, the stakes go up. Minority partners become anxious that the majority is plotting to squeeze them out. There may be accusations of self-dealing. The majority owner may then react by withholding information or firing employees who are not "his" people. These conditions frequently lead to litigation.

Partners can avoid many problems by recognizing the anxieties that come with success and taking proactive steps to avoid creating suspicion and misunderstandings.

We Can Help.

If every entrepreneur were to follow these five tips, there would be a lot fewer partnership disputes. If you need a lawyer to help you follow this advice, Thomas C. Sima should be your lawyer. If you're reading this and you're already in a dispute, give me a call and we can figure out a strategy.

John H. Snyder Named "Top 40 Under 40" Litigators in New York

John H. Snyder PLLC is proud to announce that John H. Snyder has been named to the the American Society for Legal Advocates' list of "Top 40 Under 40" litigators in New York state.

Selection for this honor is based upon educational accomplishments, involvement and leadership in bar associations and professional organizations, activities within their community, and demonstrated legal achievement, and membership in the ASLA is limited to the top 1.5% of lawyers nationwide.  John has also been named a SuperLawyer "Rising Star" for commercial litigation in the New York Metro area for 2013, 2014 and 2015.

Snyder appreciates the recognition and looks forward to serving his clients with passion and determination for the next 40 years.