Quiz 43: Law for Small Business
Sarbanes-Oxley Act: It may be the case that corporations are being more closely scrutinized for crimes since the passing of the Sarbanes-Oxley Act. It is possible that corporate crimes are committed less because more responsible persons are in supervisory positions. However, soaring penalties for corporate crimes and dilution of the intent requirement may have the paradoxical consequence of creating more corporate crime and not less. In order to avoid liability, a corporation must show that it could not have prevented the act or that there was not authorized consent to, or knowledge of, the act by persons in supervisory positions within the corporation. Additionally, a corporation must be abreast of, and in compliance with current legislation in order to reduce liability. Also, corporations should train their employees to comply with all applicable laws.
Limited Liability Structure: In the case Mixon v. Iberia Surgical, LLC, 956 So.2d 76 (2007) the trial court granted summary judgment in favor of Iberia Surgical and dismissed all claims of Dr. Mixon. The Court of Appeals affirmed. In order to avoid the outcome that was decided, Dr. Mixon may have elected to approach his fellow members in a more amicable manner. He could have reviewed the instances he thought were violations without hostility and received an answer instead of being shut out by the members that he accused. Instead he resorted to spying and covert recording in order to collect evidence against his fellows. Regarding his claims, Dr. Mixon would have had a better chance at success if he had actually made claims that were covered by the appropriate statues under which he filed his complaints. Dr. Mixon was not a consumer or competitor, so he could not assert protection under the Louisiana Unfair Trade Practices and Consumer Protection Law, La.R.S. 51:1401 or the Louisiana Whistleblower Statute, La.R.S. 46:440.3(B). Also, he may have better protected himself through language in the Operating Agreement that he helped draft. The termination without cause clause negated any argument that he could have put forth in his defense. He could also have drafted member rights that provided a defense against termination. Alternately, the members could have taken time to explain sufficiently to Dr. Mixon about the practices that were perceived violations. Mutual respect and voluntary, amicable communication would have prevented the escalation of hostilities on both sides.
Corporation v. Partnership Taxation: The tax responsibilities for corporations and partnerships are listed below in Table 1: Table 1