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OHIO ADOPTS NEW LIMITED LIABILITY COMPANY ACT

On January 8, 2021 Ohio Governor Mike DeWine signed into law the Ohio Revised Limited Liability Company Act (the “New Act”). The New Act completely replaces the existing Ohio Limited Liability Company Act (Chapter 1705 of the Ohio Revised Code) with new Chapter 1706 of the Ohio Revised Code. The New Act significantly updates Ohio’s LLC law, providing increased opportunities and flexibility. This could make Ohio a potential favorable home for an LLC.

Effective Date is April 12, 2021. Applicable date is January 1, 2022.

Important Changes:

• Default Nature: The New Act emphasizes that its contents are generally “default” provisions — applicable only to an LLC that has not adopted an operating agreement with contradicting terms. This gives business owners and investors greater flexibility to design an LLC.

• Flexible in Governance Structure: The New Act allows an LLC to be managed by a member or a manager. This allows an LLC to set up a governance body more akin to that of a for-profit corporation or partnership, such as a board of directors or an oversight committee.

• Ability to Eliminate Fiduciary Duties: The New Act permits an LLC to limit or eliminate entirely all fiduciary duties of members, managers, and officers. The only non-waivable fiduciary duty is the implied covenant of good faith and fair dealing. This has many implications in structuring and liabilities.

• Penalties for Failure to Perform: The New Act permits an LLC to set forth specified penalties and consequences in its operating agreement that will apply if a member breaches the operating agreement or upon the occurrence of a certain event. Business owners should take note of this drafting flexibility as it allows them to contractually penalize certain actions and maintain control.

• Ability of Operating Agreement to Confer Rights to Person Without Economic Interest.

• Series of Limited Liability Companies: This is a drastic change. The New Act allows an LLC to establish “series” in which the assets of each series are protected from claims against and liabilities incurred by another series or the LLC as a whole. This aspect is very useful in the context of investment funds.

• Protections Against Creditors of Members: The New Act also allows an LLC to protect itself from any claims by creditors of a member, including situations where a creditor claims a security interest in a member’s interest in the LLC.

Please contact Lei Jiang law firm to ensure the best protection accorded by the law as a result of these changes.

© 2021 Copyright by Lei Jiang LLC. All rights reserved.

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Firm Intellectual Property News

Patent Prosecution and Litigation 2020

Over the years, our firm has prosecuted many patent applications and successfully secured patents for many clients. 2020 was a busy year with many applications having been filed.  We also saw allowances issued to our clients as a result of years of work.  Here is one of the patents secured by our law firm that was granted in May 2020. The prosecuting attorney was Ms. Lei Jiang.

Click to view full image.

Click to view full image.

This particular application is a PCT application, meaning that the application was submitted through Patent Cooperation Treaty. The applicant must be a national of a PCT contracting State (a member country). There are about 150 contracting states including most major countries. This type of applications is the most complex one. There are other type applications, such as:

  • Provisional application
  • Utility application
  • Design application
  • Plant application

Our firm handles prosecution of all patent applications. It is always a great honor to practice law in front of the United State Patent and Trademark Office (USPTO). USPTO is one of the most efficient and courteous government offices in this nation.  

On patent litigation side, COVID-19 may have slowed down many economic activities, but it didn’t slow down. The infringement litigation in the first half of 2020 was up by 16% according to the National Law Journal. Also, the battleground has shifted. In 2019, Delaware had the most patent cases, but in 2020, West Texas leaped ahead with the most filings. Thus, the Western District of Texas is now entrenched as the most popular filing destination for infringement cases. This trend started when U.S. District Judge Alan Albright joined the bench in 2018.

Whether you need a patent for your idea/invention or need to defend your patent rights, we can help. For questions, please contact us.

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Business Firm News Uncategorized

2020 Business Valuation – A Recent U.S. Case

The U.S. Department of Labor recently prevailed in a district court of Virginia case involving multiple Employee Stock Ownership Plan (ESOP) valuation issues.

The case involved allegations that the selling shareholder, who was also a fiduciary of the employee stock ownership plan, as well as the bank hired to represent the ESOP as an independent fiduciary, breached their fiduciary duties by allowing the plan to overpay for the shareholder’s stock.

The district court issued a lengthy ruling on the case which addressed multiple common valuation practices such as normalization adjustments, discounting, capitalization rates, and proper look-back periods for the purposes of capitalization. For example, the Court found that:

  • The conclusion of value was strikingly close to an initial estimated value that had been floated by ESOP counsel and advisors at the inception of the transaction;
  • The appraisal was performed on a controlling basis even though the seller/owner and his wife were still going to be two of three ESOP co-trustees and occupy two of three company director seats;
  • Almost of all of the appraiser’s assumptions, including his capitalization rate, fluctuated significantly relative to previous appraisals that he had performed on the company and all in a direction towards a conclusion of higher value;
  • The appraiser did not obtain financial projections or prepare his own and get management buy-in and the appraisal utilized only a capitalized cash flow method to the exclusion of a discounted cash flow method(discounted cash flow method); and
  • The ESOP trustee raised many concerns with the draft appraisal but did not follow through and then went ahead and agreed to a purchase price before reviewing the final appraisal.

This case reminds us that (1) much discussions were needed to justify the departure from previous yearly valuations and big rise of stock value, (2) an impartial review of the valuation results might have red flagged the flaws, (3)  the fiduciaries would have been wise to remember that fiduciary duties imposed by ERISA are “the highest known to the law” and any decisions made in fiduciary capacity should have been made with an “eye single to the interests of the participants and beneficiaries.” (4) a genuine negotiation with respect to the purchase price should be conducted.

Lei Jiang Law Firm handles many aspects of business transactions. For questions, please contact us.

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Business Firm News

Civil Litigation – Important Changes to Ohio Rules of Civil Procedures

Recent amendments to the Ohio Rules of Civil Procedure will unify the timeline of court proceedings throughout the state.  For example, Ohio now has uniform motion deadlines to streamline processes.  The amendments became effective July 1, 2018 and serve to eliminate confusion regarding deadlines and other requirements.

Here are some of the specifics. For Motions for Summary Judgment, all responses are due 28 days after service of the motion, and replies are due 14 days after service of the response.

For all other motions, responses are due 14 days after service of the motion, and replies are due 7 days after service of the response.

Motions for purposes of trial, such as a motion in limine, must be filed at least twenty-eight days prior to the trial, while motions for purposes of a hearing must be served no later than fourteen days prior to the hearing.  Importantly, Rule 6 allows courts to modify the summary judgment and motion deadlines for good cause.

Discovery rules are also updated due to advancements in technology. Rule 33, 34, and 36 now state that the discovery must serve an electric copy on a shareable medium in an editable format.  These changes should result in a more streamlined and effective system. 

For legal issues, please contact us.

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Business Firm News

Civil Litigation in 2020

The Supreme Court of Ohio issued an order effectuating and expanding upon the emergency legislation Governor DeWine signed into law on March 27, 2020 in response to COVID-19, which tolled statutes of limitations, as well as litigation deadlines and timelines.  The Court’s order reflects the judicial branch’s reciprocation of H.B. 197 legislation and orders that all “time requirements” that are set to expire between March 9, 2020 and July 30, 2020 are tolled.  In effect, the order tolls all litigation deadlines that are due March 9 through July 30.

The order does allow for a court to supersede the tolling provision by issuing an order of its own on or after March 9, 2020.  Some courts, however, seem to be determined to press ahead due to concerns of unmanageable heavy case load down the road. Overall, the progress of civil cases is slowed in light of the pandemic.

Firmwide, we see no decrease of civil cases in 2020.  Five breach of contract cases alone came in before April 2020. Civil litigation is a big part of our practice. Our core substantive practice areas of corporate, business, real estate, international, and intellectual property often involve complex disputes that must be resolved in federal court. As a result, we have developed expertise capable of handling the most significant matters. 

In a civil litigation, we handle matters from pre-complaint investigation, through discovery, summary judgment, trial, and the appeals process. We are experienced yet small enough to ensure that client service remains at the forefront of every engagement. So, if you are burdened by business disputes, let us help you. For legal issues, please contact us.

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Business Firm News

2020 Mergers and Acquisitions

Our firm, Lei Jiang LLC, started 2020 with a good volume of deals and mergers and acquisitions. We continue to handle a variety of deals. In January, we successfully concluded an acquisition of a US college by a Canadian educational group. Then we put several deals together before COVID-19 spread in the US. They included a recycling company’s expansion and acquisition and several restaurant acquisitions. Currently, we are in the midst of a Chinese metal company’s second phase acquisition of a US company.

Even though the COVID-19 pandemic slowed down M&A activity due to uncertainty in valuations and companies focusing on liquidity and cost efficiencies, we expect to see more activities in three categories taking place:

  1. Well-funded strategic buyers using this opportunity to build sizeable positions in targets and /or attempt takeovers of undervalued companies;
  2. Corporates selling or spinning off non-core assets to address liquidity, leverage and valuation issues;
  3. Investors contributing capital in exchange for significant equity stakes in businesses in need of a recapitalization or with liquidity constraints.

If anything can be learned from the 2008-2009 financial crisis, we can expect a renewed use of equity as form of consideration for transactions among corporates. If you have any questions regarding M&A, please contact us. We specialize in international mergers and acquisitions and complex transactions.

For legal issues, please contact us.

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Firm News

2019-2020 White Collar Crime- Ohio RICO Defense

We represented two of eighteen defendants in a complex criminal RICO case in Cuyahoga County Common Pleas Court in 2019-2020. Eighteen defendants were charged with various crimes, including RICO and other serious felonies. Moreover, most of them were immigrants. Therefore, severe immigration consequences became important factors as well.

RICO refers to Racketeer Influenced and Corrupt Organizations Act enacted first by the US federal government, then by many states. The federal RICO was enacted in 1970 and applies only to illegal activity involving interstate or foreign commercial. Since then, many states have adopted laws based on the federal statute. These statutes provide for extended criminal penalties as well as civil lawsuit for acts performed as part of an ongoing criminal organization. Acts include bribery, extortion, fraud, and murder. These laws allow the leaders of a syndicate to be tried for the crimes they ordered – this closed a perceived loophole that the boss did not actually commit the crime personally.

Since RICO is one of the most serious crimes, the burden of proof is onerous on criminal prosecutors, but if a prosecutor establishes a criminal RICO claim, the defendant goes to jail which may be for many years.

In this case, we obtained the desired results for our clients. We actively engaged the clients, filed all necessary motions, and conducted successful plea bargains.  In the end, the clients did not go to jail, did not pay a fine, and received only very minor charges.

If you are charged, we can help. For legal issues, please contact us.

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Uncategorized

Cases at Cleveland Immigration Court

In August and September 2019, Lei Jiang Law Firm accepted six immigration bail cases and defended these clients in the Cleveland Immigration Court. These six clients were all Chinese women. They were detained by the USCIS in July 2019 when the FBI, Ohio Bureau of Investigation, and local police raided multiple illegal massage parlors. Police have not charged them with any wrongdoing. The police did not charge them with any wrongdoing.

These six women came from New York and worked at a local massage parlor. They were all Asians with limited financial resources and did not speak English. Some of the women did not have any money, so our law firm provided our legal services for free. ‘Even though our legal services were free, we provided them with our consistent standard of high-quality service. We visited them in prison many times to better understand their specific situation, collected information, provided advice, and called other social workers to give them the necessary assistance. Some of them said they were tricked into coming to Ohio. Therefore, we also hired professionals in human trafficking to help them.

In court, attorney Lei Jiang successfully won the minimum bail for each lady. Thanks to our efforts, all six women were released and reunited with their families. But our work didn’t stop there. We continued to help them by providing them with useful information, connecting them with non-profit victim protection organizations in New York, and more. We were very grateful we could help them when they were in a desperate situation.

It’s not easy being an immigration court lawyer these days. US laws change quickly, the current climate is anti-immigration, and the courts are rarely sympathetic to immigration cases. Although such bail cases are not within the main business scope of our law firm, we maintain our original intention – to help those in need, to speak out for the disadvantaged, and to hold ourselves to the highest standards.

For legal issues, please contact us.

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Firm News

Five Straight Years as Super Lawyers Rising Star

Ms. Jiang is once again selected as Super Lawyers Rising Star for 2019, an honor reserved for only 2.5% of lawyers who exhibit excellence in practice in their early years.

Ms. Jiang was first selected to the Ohio Rising Starts in 2015. Since then, she has continued the pursuit of excellence in the legal profession and has been selected as Rising Star continuously since.

Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. The patented selection process includes independent research, peer nominations and peer evaluations.

The selection process for the Rising Stars list is the same as the Super Lawyers selection process, with one exception: to be eligible for inclusion in Rising Stars, a candidate must be either 40 years old or younger or in practice for 10 years or less.

Ms. Jiang is admitted to practice law in Ohio, New York, Michigan and Illinois. Since 2009, she has focused her practice on several legal areas including corporate law, real estate, immigration, intellectual properties, and litigation. We congratulate Ms. Jiang for her excellent work in these ever changing legal fields.

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Firm News

A Complete Success in Court of Appeals for the Sixth Circuit

On September 27, 2018, the Sixth Circuit affirmed the US District Court for the Northern District of Ohio’s ruling on all aspects in Rui He, et al. v. Davor Rom, et al. Case No. 17-3411. This marked a complete victory for Plaintiffs in this case. Plaintiffs-Appellees were led by attorney Lei Jiang in this appeal.

The case was initially filed as a class action. It was related to real estate. Defendant-Appellant Davor Rom and his various companies sold over three hundred (300) distressed real estate properties as highly lucrative investment opportunities to foreign investors from six continents. It was a large-scale fraudulent scheme which harmed more than 140 investors.

Subsequent to the Sixth Circuit decision, Defendants can now file an en banc rehearing request and even petition the U.S. Supreme Court for a hearing.

This was a very complex case involving a large amount of electronically stored information and international transactions, many parties, numerous linked parts, and intricate schemes. If your case is this complex and the stakes are this high, you certainly need a skilled litigation law firm to represent you. Please contact us.

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