California business law glossary.

A working definitions list of California business, estate, ADA, and litigation terms used elsewhere on this site. Not legal advice. Each definition is general and California-specific where noted.

A

AB Trust / Bypass Trust

A married-couple estate planning structure in which the first spouse to die funds a 'B' (bypass / credit shelter) trust with assets equal to the federal estate tax exemption, with the surviving spouse as beneficiary. The 'A' (marital) trust holds the remainder for the surviving spouse. Less common since portability of the federal exemption was enacted in 2010, but still useful for blended-family planning, state estate tax management, and asset protection.

AB5 (Assembly Bill 5)

California Assembly Bill 5 (2019) codified the ABC test from Dynamex Operations West v. Superior Court (2018) for determining whether a worker is an employee or independent contractor. AB5 makes employee status the presumption and places the burden on the hiring entity to prove all three ABC prongs. AB5 includes statutory exemptions (B2B, professional services, certain referral-agency relationships), but the exemptions have strict element-by-element requirements.

ABC Liquor License

A license issued by the California Department of Alcoholic Beverage Control authorizing the sale of alcoholic beverages. California has 80+ license types (Type 41 beer/wine restaurant, Type 47 full-liquor restaurant, etc.), each with its own quota, transferability rules, and operating conditions. An ABC license does not automatically transfer with a business sale; the buyer must file a person-to-person transfer application and undergo a full ABC investigation, typically 60-90 days.

ADA Title II

Title II of the Americans with Disabilities Act covers state and local government services, programs, and activities. The DOJ's April 2024 final rule under 28 C.F.R. Part 35, Subpart H, requires state and local government websites and mobile apps to conform to WCAG 2.1 Level AA — by April 26, 2027 for entities serving 50,000+ residents, and April 26, 2028 for smaller entities. Title II does not directly govern private businesses, which fall under Title III.

ADA Title III

Title III of the Americans with Disabilities Act prohibits disability-based discrimination in places of public accommodation. Title III provides for injunctive relief and attorney's fees, but not money damages, in federal court. In California, plaintiffs typically pair Title III claims with claims under the Unruh Civil Rights Act, which adds statutory damages.

ADAAG / 2010 ADA Standards

The ADA Accessibility Guidelines, codified as the 2010 ADA Standards for Accessible Design (28 C.F.R. Parts 35 and 36, Appendix). The 2010 Standards specify technical requirements for accessible features — parking, path of travel, doors, restrooms, transaction counters, and others. California's Title 24 building code incorporates and in some respects exceeds the 2010 Standards. Plaintiff complaints typically cite specific 2010 Standards provisions when alleging physical barriers.

Adolph v. Uber

Adolph v. Uber Technologies, Inc., 14 Cal.5th 1104 (2023), addressed the post-Viking-River PAGA landscape. The California Supreme Court held that an employee whose individual PAGA claim is compelled to arbitration retains statutory standing to pursue the representative (non-individual) PAGA claims in court. Together with Viking River, Adolph defines the practical scope of PAGA arbitration in California.

Aggrieved Employee

Under PAGA, an 'aggrieved employee' is one who was employed by the alleged violator and against whom one or more of the alleged Labor Code violations was committed. The 2023 Adolph v. Uber decision confirmed that an employee whose individual PAGA claim is compelled to arbitration retains aggrieved-employee status for the representative claim that remains in court.

Anti-SLAPP Motion (§ 425.16)

A California special motion to strike a claim arising from protected speech or petitioning activity (a 'Strategic Lawsuit Against Public Participation'). Code of Civil Procedure § 425.16 provides for early dismissal, mandatory attorney's-fee shifting to a prevailing defendant, and an immediate appeal of denial. A two-step analysis: (1) the defendant shows the claim arises from protected activity, then (2) the plaintiff shows a probability of prevailing on the merits.

Arbitrary Mark

A trademark consisting of a common word used in a way unconnected to its dictionary meaning (Apple for computers, Camel for cigarettes). Arbitrary marks are inherently distinctive and strongly protectable; they sit at the upper end of the trademark-strength spectrum.

Arbitration

A private, alternative dispute resolution process in which a neutral arbitrator (or panel) hears evidence and argument and issues a binding award. Arbitration is governed in California by the California Arbitration Act (Code of Civil Procedure section 1280 et seq.) and, in many commercial matters, the Federal Arbitration Act. Arbitration agreements are common in employment and commercial contracts; their enforceability turns on procedural and substantive unconscionability analysis under Armendariz.

Arroyo v. Rosas

Arroyo v. Rosas, 19 F.4th 1202 (9th Cir. 2021), reshaped where California ADA / Unruh cases are filed. The Ninth Circuit held that California's high-frequency-litigant rules create “exceptional circumstances” under 28 U.S.C. § 1367(c)(4) that permit district courts to decline supplemental jurisdiction over Unruh damages claims paired with federal ADA injunctive claims — though it reversed in that particular case because the district court declined jurisdiction only after effectively deciding the entire case. After Arroyo (and Vo v. Choi, 49 F.4th 1167 (9th Cir. 2022)), federal courts routinely decline these claims early, so plaintiffs now file in state superior court to preserve the $4,000-per-occurrence damages remedy.

Article III Standing

The federal constitutional requirement that a plaintiff in federal court demonstrate (1) an injury in fact that is concrete and particularized, (2) fairly traceable to the defendant's conduct, and (3) redressable by a favorable judicial decision. The Supreme Court has tightened standing requirements in TransUnion LLC v. Ramirez (2021) and a series of consumer-protection and ADA cases. Standing challenges are a core defense in federal-court serial-filer ADA matters.

Articles of Incorporation

The document filed with the California Secretary of State to form a corporation. The Articles establish the entity's legal existence but do not, by themselves, govern internal operations, those are addressed in the bylaws and any shareholders' agreement.

Articles of Organization

The California Secretary of State filing that creates an LLC. Articles of Organization legally establish the LLC but do not substitute for an operating agreement, which sets out members' rights, voting, contributions, and dispute resolution.

Asset Purchase Agreement

A purchase agreement under which a buyer acquires specified assets (and often specified liabilities) of a target business, rather than the equity of the entity. Asset deals tend to allow buyers to limit successor liability but often require third-party consents on contract assignments.

Auxiliary Aids and Services

Under ADA Title III, 42 U.S.C. § 12182(b)(2)(A)(iii), covered entities must provide appropriate auxiliary aids and services to ensure effective communication with individuals with disabilities, unless doing so would fundamentally alter the nature of the service or impose an undue burden. The DOJ's implementing regulation, 28 C.F.R. § 36.303, expressly includes 'accessible electronic and information technology' in the definition of auxiliary aids.

B

Bulk Sale Notice

California Commercial Code § 6101 et seq. requires public notice to creditors when a business is sold in bulk (substantially all the inventory, equipment, and furniture). The notice must be recorded with the county recorder, published in a newspaper of general circulation, and mailed to known creditors at least 12 business days before closing. Failure to comply means the buyer takes the assets subject to the seller's unsecured creditor claims.

Buy-Sell Agreement

An agreement among the owners of a business that specifies the terms on which an owner's interest must be sold to the other owners or the entity on certain triggering events — death, disability, divorce, retirement, withdrawal, or termination. Buy-sell agreements typically address valuation methodology, payment terms, and funding (often life insurance). Without a buy-sell agreement, founder transitions in California closely held businesses frequently end in litigation.

Bylaws

The internal governance rules of a California corporation, addressing director and officer roles, meeting and voting procedures, indemnification, and amendment. Bylaws are not filed with the Secretary of State but are required as a practical matter to operate the corporation.

C

C-Corporation

A corporation taxed as a separate entity under Subchapter C of the Internal Revenue Code. C-corporations face corporate-level federal income tax, plus shareholder-level tax on dividends. Often chosen by venture-funded startups because of preferred-stock and 83(b)/QSBS treatment.

Calcano v. Swarovski

Calcano v. Swarovski N. Am. Ltd., 36 F.4th 68 (2d Cir. 2022), tightened Article III standing requirements for serial-filer ADA plaintiffs in federal court. The Second Circuit held that the plaintiff must allege concrete, particularized injury — not merely 'informational' injury — to maintain a Title III action. Useful precedent in motions to dismiss serial-filer cases in federal court.

CAM Charges (Common Area Maintenance)

Charges allocated to commercial tenants for the cost of maintaining and operating shared areas of a property (parking lots, common entrances, landscaping, security, exterior cleaning). CAM charges are typically billed monthly as additional rent and reconciled annually. The lease's CAM clause specifies what costs are includible, the allocation method, audit rights, and any caps on year-over-year increases.

CASp

Certified Access Specialist, a state-certified inspector who audits a business premises for ADA Title III and California accessibility compliance. A current CASp report can entitle a sued business to procedural protections including a stay of proceedings and reduced statutory damages under California law.

CDTFA (California Department of Tax and Fee Administration)

The California agency that administers state sales and use tax, special taxes (cannabis, fuel, tobacco), and several other taxes and fees. In a business sale, the buyer must obtain a CDTFA tax clearance certificate under Rev. & Tax. Code §§ 6811-6814 to avoid successor liability for the seller's unpaid sales tax (up to the purchase price).

Cease and Desist

A written demand that the recipient stop specified conduct, typically intellectual-property infringement, defamation, breach of contract, or harassment. A cease and desist letter is not itself an enforceable order; it preserves the sender's rights, signals seriousness, and often serves as the predicate for an injunction or damages claim if the conduct continues.

Choice-of-Law Provision

A contractual provision specifying which jurisdiction's law governs the interpretation and enforcement of the contract. California courts generally enforce choice-of-law clauses unless the chosen law has no substantial relationship to the parties or transaction and contravenes a fundamental California public policy (Nedlloyd Lines B.V. v. Superior Court, 3 Cal.4th 459 (1992)). Certain California protections (Labor Code, B&P unfair competition) are difficult to contract around even with an out-of-state choice-of-law clause.

Claim

A legal cause of action, a demand for relief based on alleged facts and applicable law. A complaint may include multiple claims (counts), and each claim has its own elements that the plaintiff must plead and prove. Claims have separate statutes of limitations and may be subject to claim-specific defenses.

Cliff (Vesting Cliff)

The minimum service period before any equity vests. The standard one-year cliff means that if the holder leaves before completing one year of service, no equity vests at all. After the cliff, vesting accelerates to monthly or quarterly. Cliffs protect founders and existing equity holders from short-term hires walking away with vested shares.

Commingling

Mixing personal and business funds, for example, paying personal expenses from a business account. Commingling is one of the principal factors a court considers in deciding whether to pierce the corporate veil and impose personal liability on the owner.

Contingency Fee

A fee structure under which the attorney is paid only if the client recovers, typically as a percentage of the recovery. California requires written contingency-fee agreements and prohibits contingency arrangements in certain matters (such as criminal defense and family law).

Convertible Note

A short-term debt instrument that converts into equity upon a triggering event, usually the next priced financing round. Convertible notes accrue interest, have a maturity date, and rank as debt in the capital structure. They typically include a valuation cap and conversion discount that reward early investors. Convertible notes are more common in early-stage California financings than they were a decade ago, though SAFEs have taken some of the same use cases.

Corporate Veil

The legal separation between a corporation or LLC and its owners, which generally limits owner liability for entity debts to the amount invested. The veil can be pierced if a court finds the entity is the alter ego of its owner, typically based on commingling, undercapitalization, or failure to follow corporate formalities.

D

DBA

Doing Business As, a fictitious business name used by a sole proprietorship, partnership, or registered entity to operate under a name different from the legal name. A DBA is a registration; it does not create an entity, provide liability protection, or grant trademark rights.

Defamation

A false statement of fact, communicated to a third party, that injures another's reputation. California distinguishes libel (written or fixed form) from slander (spoken). Defamation per se claims, statements imputing crime, contagious disease, professional incompetence, or unchastity, do not require proof of special damages. The statute of limitations is one year under Code of Civil Procedure section 340(c).

Default Judgment

A judgment entered against a defendant who fails to respond to a complaint within the statutory time limit. In California, the default response window is 30 days from service in state court and 21 days in federal court. Default judgments routinely award the full amount pleaded in the complaint, plus attorney's fees and costs. Default judgments can sometimes be set aside under Code of Civil Procedure § 473(b) for excusable neglect, if a motion is filed promptly.

Defendant

The party against whom a civil claim or criminal charge is brought. In California civil practice, the defendant must respond to a complaint within 30 days of service (state court) or 21 days (federal court) by answer, demurrer, or motion.

Demand Letter

A written communication asserting a legal claim and requesting a specific remedy before litigation. A well-drafted demand letter often resolves disputes by clarifying the claimant's position and the consequences of non-resolution.

Demurrer

A California state-court procedural motion challenging the legal sufficiency of a complaint (or other pleading) before answering it. Code of Civil Procedure § 430.10 lists the grounds, the most common being failure to state facts sufficient to constitute a cause of action. A successful demurrer typically results in leave to amend; demurrers sustained without leave to amend dismiss the case at the pleading stage. The functional analog in federal court is the FRCP 12(b)(6) motion to dismiss.

Derivative Action

A lawsuit brought by a shareholder or LLC member on behalf of the entity, typically to remedy a wrong against the entity that the entity itself has failed to pursue (often because the wrongdoer is in management).

Descriptive Mark

A trademark that directly describes a characteristic or feature of the goods or services. Descriptive marks are not inherently distinctive and are protectable only on a showing of secondary meaning — that consumers have come to associate the mark with a single source through extensive use (typically five-plus years of substantially exclusive use).

Discovery

The pre-trial process by which parties to litigation obtain information from each other and from non-parties. California state court discovery is governed by the Civil Discovery Act, Code of Civil Procedure § 2016.010 et seq.; federal court by the Federal Rules of Civil Procedure. Common discovery devices include interrogatories, requests for production of documents, depositions, requests for admission, and physical or mental examinations.

DLSE (Division of Labor Standards Enforcement)

The California Division of Labor Standards Enforcement, also called the Labor Commissioner's Office. The DLSE administers California wage-and-hour statutes and accepts employee complaints for unpaid wages, meal and rest break violations, retaliation, and similar matters. DLSE complaints proceed through an informal conference and, if unresolved, a hearing (Berman hearing). DLSE awards can be appealed de novo to the superior court.

Drag-Along Rights

A contractual provision that allows a majority equity holder, on a sale of the company, to require minority holders to vote in favor of and participate in the sale on the same terms. Drag-along rights are essential to delivering a clean acquisition to a buyer, who typically requires unanimous (or near-unanimous) seller approval to close. The threshold for triggering the drag is heavily negotiated.

Due Diligence

The investigation a buyer undertakes before acquiring a business, covering financial, legal, tax, employment, intellectual property, and contractual matters. The findings inform purchase-price adjustments, indemnification scope, and conditions to closing.

E

Earn-Out

A purchase-price mechanism under which a portion of the consideration is paid post-closing, contingent on the acquired business hitting agreed performance milestones. Earn-outs bridge valuation gaps but are a common source of post-closing disputes.

EDD Audit

An audit by the California Employment Development Department, typically focused on worker classification (1099 vs. W-2), payroll tax remittance (UI, SDI, PIT withholding), and unemployment-insurance eligibility. Reclassification findings frequently spawn parallel Labor Commissioner and PAGA exposure. Response deadlines are short, and EDD audit results carry preclusive weight in related private litigation.

Employee Misclassification

Treating a worker as an independent contractor when California's ABC test (Labor Code section 2775) classifies the worker as an employee. Misclassification can trigger wage-and-hour, tax, and PAGA exposure.

Engagement Letter

The written agreement between attorney and client that defines the scope of representation, fee structure, and other engagement terms. California Rule 1.5 requires written fee agreements in most matters.

Escrow

A neutral third-party arrangement under which funds, documents, or other deliverables are held pending satisfaction of agreed conditions. In M&A, escrow typically secures the buyer's indemnification rights for a defined period.

Estoppel Certificate

A written statement, usually by a landlord, confirming the current status of a lease — the current rent, whether there are any defaults, the security deposit balance, lease term and options, and any side agreements. Estoppel certificates are typically required as a closing condition in business sales involving leased premises (the buyer cannot rely on the seller's representations about the lease without independent landlord confirmation).

Executor

The person named in a will to administer a decedent's estate, also called personal representative. Authority to act as executor is conferred by the probate court (typically through Letters Testamentary). Subject to fiduciary duties to the estate's beneficiaries; statutory fees are set by Probate Code sections 10800-10810. If the named executor declines or is unavailable, the court appoints a successor.

F

Fanciful Mark

A coined or invented word with no prior meaning (Kodak, Exxon, Verizon). Fanciful marks are the strongest category on the trademark distinctiveness spectrum, inherently distinctive, and almost always registrable without difficulty.

Faraid (Islamic Inheritance)

The Islamic law of inheritance, based on fixed shares prescribed by the Qur'an and Sunnah for specified heirs (spouses, parents, children, siblings). Faraid governs the distribution of a Muslim decedent's estate among heirs after debts and bequests. California civil law accommodates faraid through estate planning instruments (trusts, wills) that direct distribution in accordance with Islamic principles, subject to certain limits on disinheriting protected beneficiaries.

FF&E (Furniture, Fixtures, and Equipment)

The tangible personal property of a business — furniture, fixtures, kitchen equipment, point-of-sale systems, signage, and similar items. In a restaurant sale, FF&E is allocated and described in detail in the purchase agreement, both for transfer mechanics and tax purposes (depreciation recapture turns on the allocation between asset classes).

Fictitious Business Name

California's statutory term for a DBA. Required to be registered in the county where the principal place of business is located, and republished annually under Business and Professions Code section 17900 et seq.

Fiduciary Duty

A legal duty of loyalty and care owed by certain persons (officers, directors, partners, managing members, trustees) to others (the entity, fellow owners, beneficiaries). Breach of fiduciary duty is a frequent basis for derivative and partnership-dispute claims.

Force Majeure

A contract clause excusing performance when extraordinary events outside a party's control (acts of God, war, government order) prevent performance. The 2020-2022 pandemic litigation reshaped how California courts read these clauses.

Foreign LLC

An LLC formed in another state that registers with the California Secretary of State to transact business in California. Foreign LLCs pay California's $800 annual franchise tax and must designate an agent for service of process in California.

Forum-Selection Clause

A contractual provision specifying where disputes must be litigated. California courts generally enforce forum-selection clauses but apply heightened scrutiny under Labor Code § 925 (employment contracts cannot require non-California adjudication of California-employee disputes) and certain consumer-protection statutes. Mandatory forum-selection clauses in employment agreements with California workers are largely unenforceable.

FTB (Franchise Tax Board)

The California agency that administers state corporate and personal income tax, including the $800 annual minimum franchise tax for LLCs and corporations. In a corporate business sale, FTB tax clearance certifies the entity has paid all state income tax and minimum franchise tax through the closing date — without it, a buyer of a corporate-held business can be pursued for the seller's unpaid franchise tax.

G

Generic Mark

A term that names the genus or class of goods or services, rather than identifying a particular source. Generic terms are never protectable as trademarks — anyone can use them. Marks that become generic over time (escalator, aspirin, thermos) lose their trademark protection through genericide.

Gift Tax

Federal tax on lifetime gratuitous transfers exceeding the annual exclusion ($19,000 per donee in 2025, indexed for inflation). Gifts above the annual exclusion reduce the donor's lifetime exemption (the unified estate-and-gift exemption, $13.99M in 2025). California has no separate state gift tax. Properly structured gifting is a core estate-planning tool to reduce taxable estates.

Grandfather Clause (ADA)

The popular but largely incorrect notion that older buildings are exempt from ADA accessibility requirements. The ADA's actual standard is whether barrier removal is readily achievable for existing facilities, there is no broad grandfathering.

Grantor

Synonymous with settlor and trustor: the person who creates a trust by transferring property to the trustee. Federal tax law uses grantor extensively (grantor trust, grantor's retained interest). The grantor's intent, expressed in the trust instrument, controls administration.

H

Heggstad Petition

A California probate court petition under Probate Code § 850 to confirm that an asset is held in a trust even though the asset was not formally retitled to the trust during the settlor's lifetime. Named for Estate of Heggstad, 16 Cal.App.4th 943 (1993). The petition is the remedy for the common funding mistake of executing a trust but failing to transfer assets into it; without it, those assets pass through probate.

I

Incapacity

The legal or factual inability to make informed decisions, typically due to dementia, cognitive impairment, severe illness, or injury. Incapacity triggers durable and springing powers of attorney, advance health-care directives, trustee-succession provisions in revocable trusts, and, where no planning is in place, conservatorship proceedings under California Probate Code section 1800 et seq.

Indemnification

A contractual or statutory obligation of one party to make another whole for specified losses. In M&A, indemnification typically covers breach of representations and warranties, and is often capped, basket-protected, and subject to a survival period.

Independent Contractor (ABC Test)

California's three-prong test (Labor Code section 2775) that presumes a worker is an employee unless the hiring entity proves: (A) the worker is free from control, (B) the work is outside the usual course of the hiring entity's business, and (C) the worker is engaged in an independently established business.

Injunctive Relief

A court order directing a party to do (mandatory) or not do (prohibitory) something. ADA Title III cases generally yield only injunctive relief plus attorney's fees in federal court, Unruh Act damages are added under California law.

Injury

A legally cognizable harm, whether physical, economic, reputational, or emotional. Injury (or damages) is a required element of most California civil claims; without injury, a claim fails even if the defendant's conduct was wrongful. Damages may be compensatory, special, general, or punitive depending on the claim.

Integration Clause (Merger Clause)

A contractual provision stating that the written agreement is the complete and final expression of the parties' agreement, superseding prior negotiations, drafts, and oral discussions. California Code of Civil Procedure § 1856 (the parol evidence rule) gives integration clauses significant weight in determining what extrinsic evidence a court will consider in interpreting the contract.

Intent to Use (ITU) Trademark Application

A federal trademark application based on a bona fide intent to use the mark in commerce in the future, rather than actual current use. Filing an ITU application establishes a constructive use date as of filing, but the registration does not issue until the applicant files a statement of use proving actual use. ITU applicants get one initial six-month extension as of right and can extend further with cause.

Intestate Succession

California's default rules for distributing a decedent's estate when there is no will. Probate Code sections 6400-6414 control. The intestate distribution often diverges from what most people assume, particularly for unmarried partners and step-children.

Irrevocable Trust

A trust whose terms cannot be modified, amended, or revoked by the settlor after creation, except as specifically permitted by the trust instrument or under California Probate Code mechanisms (decanting under Probate Code section 19501 et seq.; judicial modification under section 15400 et seq.). Irrevocable trusts are commonly used for asset protection, gift and estate tax planning, life insurance ownership (ILITs), and charitable planning. Compare living trust, which is typically revocable.

Iskanian

Iskanian v. CLS Transp. Los Angeles, LLC (2014), the California Supreme Court decision holding that PAGA representative-action waivers in pre-dispute arbitration agreements are unenforceable as against California public policy.

J

Joint and Several Liability

A liability arrangement under which each obligor can be held responsible for the entire amount owed, regardless of relative fault. A common feature of partnership liability and many guaranty arrangements.

Judicial Dissolution

A court-ordered dissolution of a corporation or LLC, typically sought when owners are deadlocked or one owner has engaged in oppressive or fraudulent conduct. California Corporations Code section 17707.03 governs LLC dissolution; section 1800 governs corporations.

L

Labor Code § 2802 (Indemnification)

California Labor Code § 2802 requires employers to indemnify employees for necessary expenditures and losses incurred in the discharge of their duties. § 2802 covers business expenses (cell-phone use for work, mileage, uniforms, tools), and the obligation is non-waivable. Violations are frequently the basis of PAGA representative claims, particularly in industries with significant employee-borne expenses (restaurants, delivery, sales).

Letter of Intent (LOI)

A pre-deal document outlining the principal terms of a transaction, typically non-binding except for confidentiality, exclusivity, and expense provisions. Sets the framework for a definitive agreement.

Libel

Defamation in written, printed, broadcast, or otherwise fixed form, including online posts, emails, and recorded statements. Treated as more serious than spoken slander because of permanence and reach. Libel per se claims (statements imputing crime, contagious disease, professional incompetence, or unchastity) do not require proof of special damages. California Civil Code section 45 codifies libel; the statute of limitations is one year.

Likelihood of Confusion

The central test for trademark infringement and registrability refusals under § 2(d) of the Lanham Act. The legal question is whether ordinary consumers are likely to be confused, mistaken, or deceived as to the source or sponsorship of goods or services. The Ninth Circuit applies the Sleekcraft factors; the TTAB applies the related DuPont factors.

Limited Liability Company (LLC)

A California entity that combines limited liability protection with pass-through tax treatment by default. Governed by the California Revised Uniform Limited Liability Company Act (RULLCA) and the LLC's operating agreement.

Liquidated Damages

A contractual provision specifying the amount of damages payable on breach, in lieu of proving actual damages. California Civil Code § 1671 generally enforces liquidated damages clauses in commercial contracts unless they are unreasonable under the circumstances when made — i.e., they function as a penalty rather than a good-faith estimate of probable damages. Consumer contracts have stricter rules.

Litigation

The process of resolving disputes through the court system, from filing the complaint through pleadings, discovery, motion practice, trial, and appeal. California civil litigation is governed by the Code of Civil Procedure, the California Rules of Court, and local-court rules. Distinguished from alternative dispute resolution (arbitration, mediation), which proceed outside court.

Living Trust

A revocable trust funded during the settlor's lifetime that holds assets for the benefit of the settlor and, upon death, named beneficiaries. The principal advantage in California is avoidance of probate and its statutory fee structure.

M

Madrid Protocol

An international system for registering trademarks in multiple member countries through a single application filed with the applicant's national trademark office. A U.S. trademark owner can file an international application via the USPTO, designating any of the 100+ Madrid Protocol member countries. Madrid filings are typically more cost-effective than separate national filings but have technical limitations (basic-application dependency for five years).

Manager-Managed LLC

An LLC governance structure under which designated managers (who may or may not be members) make ordinary-course business decisions, while members retain voting rights only on enumerated matters. Compare member-managed LLC.

Martinez v. Cot'N Wash

Martinez v. Cot'N Wash, Inc., 81 Cal.App.5th 1026 (2022), is the most important defense decision in California website-accessibility litigation. The Court of Appeal held that a standalone e-commerce website with no California physical nexus is not a 'place of public accommodation' under ADA Title III, and that mere WCAG noncompliance does not, by itself, satisfy the Unruh Act's intentional-discrimination requirement. The decision supports a strong demurrer for pure online retailers with no California brick-and-mortar presence.

Meal Break Premium (Labor Code § 226.7)

California Labor Code § 226.7 requires an employer to pay a one-hour premium (at the regular rate of pay) for each workday a non-exempt employee is denied a compliant meal or rest break. The premium is wages, not a penalty, and is subject to the same waiting-time penalties and itemized-wage-statement rules as any other wage. Aggregated across a workforce and a three-year limitations period, meal-break premiums are frequently the basis of class actions and PAGA claims.

Mediation

A non-binding alternative dispute resolution process in which a neutral mediator facilitates settlement discussion between the parties. Unlike arbitration, the mediator does not decide the dispute. Mediation communications are confidential under California Evidence Code sections 1115-1128 and generally cannot be used as evidence if mediation fails. Many California courts require mediation before trial.

Mediator

The neutral third party who facilitates a mediation, helping parties identify interests, evaluate positions, and reach a voluntary settlement. Mediators are typically retired judges, experienced practitioners, or trained ADR professionals. Bound by California Evidence Code mediation-confidentiality rules; their notes and impressions are generally not discoverable.

Member-Managed LLC

An LLC governance structure under which all members participate in management. The default in California unless the operating agreement specifies otherwise.

Minute Book

The bound or electronic record of corporate or LLC meetings, written consents, and significant resolutions. Maintaining a current minute book is one of the formalities California courts consider in veil-piercing analyses.

Motion to Dismiss (FRCP 12(b))

A federal-court motion seeking dismissal of a complaint on grounds enumerated in Federal Rule of Civil Procedure 12(b), including lack of subject-matter jurisdiction (12(b)(1)), lack of personal jurisdiction (12(b)(2)), improper venue (12(b)(3)), and failure to state a claim (12(b)(6)). The state-court analog in California is the demurrer.

Motion to Set Aside Default (§ 473(b))

A California state-court motion under Code of Civil Procedure § 473(b) seeking to vacate a default or default judgment on grounds of mistake, inadvertence, surprise, or excusable neglect. The motion must be filed within six months of entry of default. Attorney-fault declarations under § 473(b) make set-aside essentially mandatory when the failure to respond was counsel's; client-fault motions face a higher discretionary standard.

N

Nondisclosure Agreement (NDA)

A contract under which one or more parties agrees to keep specified information confidential. NDAs may be unilateral or mutual and typically address scope, term, exclusions, and remedies.

O

Operating Agreement

The internal governance contract of an LLC, addressing member contributions, voting, distributions, transfer restrictions, buy-outs, and dissolution. California presumes equal management and equal distribution among members in the absence of a written agreement, regardless of capital contributions.

P

PAGA

California's Private Attorneys General Act (Labor Code section 2698 et seq.), empowers employees to bring civil actions on behalf of the state to recover labor-code penalties. Substantially reformed by AB 2288 and SB 92 in 2024.

PAGA Notice (LWDA Notice)

The pre-filing notice an aggrieved employee must send to the California Labor Workforce Development Agency (LWDA) and the employer before bringing a PAGA representative action. Labor Code § 2699.3 sets out the contents and procedural requirements. The 2024 PAGA reforms substantially strengthened the LWDA's review and intervention rights and added employer-side cure procedures.

Person-to-Person Transfer (ABC)

The process by which an existing California ABC liquor license is transferred from the current licensee to a new owner. The application (Form ABC-211) requires fingerprinting and background checks on all owners, financial source documentation, 30-day public notice posting at the premises, and ABC investigation. The transfer typically closes into escrow with ABC approval as a closing condition.

Personal Guaranty

A contractual undertaking by an individual to be personally liable for the debt or performance obligations of an entity. Common in commercial leases, vendor credit, and SBA loans, and a frequent surprise to founders who thought their LLC insulated them.

Piercing the Corporate Veil

A doctrine permitting courts to disregard the legal separation between an entity and its owners, exposing the owners to personal liability for entity debts. California considers factors including commingling of funds, undercapitalization, failure to maintain records, and use of the entity to perpetrate fraud or injustice.

Place of Public Accommodation

Under ADA Title III, a 'place of public accommodation' is one of twelve enumerated categories of physical facility, 42 U.S.C. § 12181(7), including restaurants, hotels, retail stores, professional offices, and similar establishments. Whether a website itself qualifies as a public accommodation is contested — the Ninth Circuit holds it does only when tied to a physical location (Robles); the Third, Sixth, and Eleventh Circuits hold it does not.

Plaintiff

The party initiating a civil action by filing a complaint. The plaintiff bears the burden of pleading and (typically) proving each element of every claim asserted. In a cross-complaint, a defendant may also become a cross-complainant against the original plaintiff or a new party.

POUR Principles

The four foundational principles of the Web Content Accessibility Guidelines: Perceivable, Operable, Understandable, and Robust. Every WCAG success criterion is organized under one of the four POUR principles. Frequently cited in California ADA defense and remediation discussions as a way to structure accessibility audits.

Pour-Over Will

A short will accompanying a living trust, directing that any assets owned at death not already titled in the trust pour over into the trust. Acts as a safety net for funding gaps.

Power of Attorney

A document under which one person (the principal) authorizes another (the agent or attorney-in-fact) to act on the principal's behalf. Durable powers of attorney remain effective during incapacity; springing powers take effect only upon a defined event.

Probate

The court-supervised process of administering a decedent's estate. California probate fees are set by statute (Probate Code sections 10800-10810) and based on the gross value of the estate, which often makes probate expensive, and is the principal driver of trust planning.

Professional Corporation (PC / APC)

A California corporation organized under the Moscone-Knox Professional Corporation Act for professionals (lawyers, doctors, accountants, etc.). Subject to ownership and governance rules specific to the profession. APC (a professional corporation) is the suffix used in firm names.

Promissory Note

A written promise to pay a specified sum, typically with interest, on stated terms. Frequently used in seller-financed business sales, founder loans, and intercompany lending.

Q

Quitclaim

A transfer of whatever interest the transferor has, without warranty as to the quality of title. Quitclaim deeds are common in dissolution-of-marriage transfers and in inter-LLC transfers.

R

Reasonable Accommodation

A change to policies, practices, or procedures that allows a person with a disability to access goods and services or perform essential job functions. Under ADA Title III, a covered entity must take steps that are reasonable and do not fundamentally alter the nature of the goods, services, or operations. The phrase appears in both Title III (public accommodation) and Title I (employment) contexts with somewhat different legal tests.

Recapture Clause

A provision in a commercial lease that allows the landlord, upon the tenant's request to assign or sublease, to terminate the lease entirely and recapture the premises — often pocketing whatever assignment fee or buy-out the tenant negotiated. Recapture clauses are common in California shopping-center leases and can sink an otherwise structured restaurant sale; reviewing the recapture language is essential before signing an LOI.

Receiver

A neutral third party appointed by a court to take custody of property or operate a business pending resolution of a dispute. Receivership is an extraordinary remedy in business disputes, reserved for circumstances where no less-intrusive remedy will protect the parties' interests.

Representations and Warranties

Statements of fact made by parties to a transaction, allocating risk if the statements turn out to be untrue. In M&A, the seller's reps and warranties are typically the most heavily negotiated section of a purchase agreement.

Rest Break Premium

Under California Labor Code § 226.7 and the IWC Wage Orders, non-exempt employees are entitled to a 10-minute paid rest break for every four hours worked. Failure to provide a compliant rest break triggers the same one-hour premium as a missed meal break. The premium is separately recoverable for meal and rest violations (Naranjo v. Spectrum Security Services, 13 Cal.5th 93 (2022)).

Retainer

An advance fee deposit held in the attorney's client trust account, against which legal fees are billed as work is performed. Distinguished from a true retainer or engagement fee, which is non-refundable and earned upon receipt.

Robles v. Domino's Pizza

Robles v. Domino's Pizza, LLC, 913 F.3d 898 (9th Cir. 2019), held that ADA Title III applies to a business's website and mobile app when they are a 'means to access' the goods and services of its physical places of public accommodation — the 'nexus' theory. The Ninth Circuit rejected the argument that the DOJ's failure to promulgate Title III website regulations excuses compliance. Robles is the governing standard for any California business with both a website and brick-and-mortar locations.

ROFR (Right of First Refusal)

A contractual right giving the holder the option to match any third-party offer to purchase specified property (often shares or membership interests) before the offering party can sell to the third party. Standard in California operating agreements, shareholder agreements, and buy-sell agreements to keep ownership within an existing group. Mechanically distinct from a right of first offer (ROFO), under which the holder gets the right to make the first bid.

RULLCA

California's Revised Uniform Limited Liability Company Act (Corporations Code section 17701.01 et seq.), the comprehensive statutory framework governing LLCs in California.

S

S-Corporation

A federal tax election under Subchapter S of the Internal Revenue Code, available to qualifying corporations and LLCs. S-corp election allows pass-through taxation while reducing self-employment taxes through reasonable salary plus distributions, but imposes ownership restrictions.

SAFE (Simple Agreement for Future Equity)

An investment instrument developed by Y Combinator in 2013 under which an investor provides capital to a startup in exchange for the right to receive equity at a future financing round, typically at a discount or with a valuation cap. A SAFE is not debt — there is no interest, no maturity date, and no repayment obligation — but the SAFE does carry conversion mechanics that can substantially dilute founders if the cap is too low.

Section 83(b) Election

An Internal Revenue Code § 83(b) election allows a recipient of restricted equity (subject to vesting) to elect, within 30 days of receiving the equity, to pay income tax on the current fair market value rather than on the value at each vesting date. The election is particularly valuable when the equity has minimal current value (early-stage startup) but is expected to appreciate substantially before vesting. The 30-day deadline is jurisdictional — late elections are not permitted.

Securities

Investment instruments, including stocks, bonds, debentures, notes, and certain LLC and partnership interests, regulated federally by the SEC under the Securities Act of 1933 and the Securities Exchange Act of 1934, and in California by the Corporate Securities Law of 1968. Issuance and resale generally require registration with the SEC and California Department of Financial Protection and Innovation, or qualification under an exemption (Regulation D, Rule 506, intra-state, accredited-investor, etc.). Founders raising capital almost always rely on exemptions.

Serial Plaintiff

A plaintiff who has filed many separate ADA Title III or Unruh Act lawsuits — often dozens or hundreds. California's most prolific serial plaintiffs (Whitaker, Garcia, Mageno, Sandoval, others) account for the bulk of ADA filings. Courts have not adopted a per se rule against serial plaintiffs, but California Code of Civil Procedure § 425.55 imposes heightened pleading and standing rules on 'high-frequency litigants' in state court.

Settlor

The person who creates a trust by transferring property to the trustee. Also called grantor or trustor. The settlor's intent, expressed in the trust instrument, controls trust administration.

Shareholder

An owner of shares in a corporation. Shareholder rights typically include voting (per share), participation in distributions and dividends, and access to corporate books and records under California Corporations Code sections 1600-1605. In closely held corporations, shareholder rights are often shaped by a shareholders' agreement that supplements or modifies statutory defaults.

Shareholders' Agreement

A contract among the shareholders of a corporation (and often the corporation itself) addressing governance, transfer restrictions, buy-sell triggers, valuation, voting agreements, and dispute resolution. A practical necessity for closely held corporations.

Slander

Defamation in spoken (oral) form. Generally requires the plaintiff to prove special damages, unless slander per se applies, statements imputing crime, contagious or loathsome disease, professional incompetence, or unchastity. Codified in California Civil Code section 46. Compare libel, which covers written or fixed forms.

Sleekcraft Factors

The eight factors the Ninth Circuit applies to assess likelihood of confusion in trademark infringement cases, from AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979): (1) strength of the mark; (2) proximity of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and degree of purchaser care; (7) defendant's intent in selecting the mark; (8) likelihood of expansion of product lines.

Small Estate Affidavit (§ 13100)

California Probate Code § 13100 allows the successor to a decedent's personal property to claim it via a simple affidavit, without a full probate proceeding, if the gross value of the decedent's California estate (excluding certain property like jointly held assets and trust property) does not exceed a statutory threshold (currently $208,850 for deaths in 2025). The affidavit is presented to the holder of the property (bank, brokerage, etc.) along with the death certificate.

SNDA (Subordination, Non-Disturbance, Attornment)

A three-part agreement among a commercial tenant, landlord, and landlord's mortgage lender. The tenant agrees to subordinate the lease to the lender's mortgage; the lender agrees not to disturb the tenant's possession if the landlord defaults and the lender forecloses; and the tenant agrees to attorn to (recognize) the lender as the new landlord post-foreclosure. SNDAs are particularly important for restaurants with significant tenant improvements.

Sole Proprietorship

A business owned and operated by a single individual without a separate legal entity. The owner is personally liable for all business obligations. Default form for an unincorporated business owned by one person.

Spendthrift Provision

A trust clause that restricts the beneficiary's ability to assign or transfer their interest in the trust, and shields the beneficiary's interest from most creditor claims while the assets remain in trust. California Probate Code § 15300 et seq. governs spendthrift trusts. Limited exceptions apply for child support, spousal support, and certain government claims.

Statute of Limitations

The deadline for bringing a legal claim. California periods vary by claim type, for example, four years for written contract, three years for fraud, two years for personal injury, three years for breach of fiduciary duty (continuing on a discovery basis).

Step-Up in Basis

Under Internal Revenue Code § 1014, the tax basis of an asset is adjusted to its fair market value at the date of the decedent's death (or alternate valuation date) when transferred at death. This wipes out unrealized capital gain accrued during the decedent's lifetime — a substantial planning advantage for appreciated assets. California, unlike some states, has no state-level inheritance or estate tax that would offset the federal step-up.

Subpoena

A court order requiring the recipient to either testify (subpoena ad testificandum) or produce documents (subpoena duces tecum). Civil subpoenas in California state court are governed by Code of Civil Procedure § 2020.010 et seq.; federal subpoenas by FRCP 45. Response deadlines are typically 15-20 days, depending on the type. Objections must generally be raised before the production date — failure to object timely can waive otherwise valid privilege protections.

Successor Liability

A doctrine under which a buyer of a business may inherit specified liabilities of the seller, even in an asset deal that purports to be free and clear. Common categories include bulk-transfer claims, environmental liability, certain tax obligations, and de-facto-merger or mere-continuation theories.

Successor Trustee

The person or entity who assumes trustee responsibilities after the original trustee dies, resigns, or becomes incapacitated. The trust instrument names the successor trustee (often the settlor's adult child, a professional fiduciary, or a corporate trustee). The successor's duties begin immediately on the triggering event and include marshaling trust assets, paying debts and taxes, and distributing to beneficiaries according to the trust terms.

Suggestive Mark

A trademark that suggests, rather than directly describes, a characteristic of the goods (requires imagination to connect mark to product). Suggestive marks are inherently distinctive and protectable from first use, without secondary meaning. Examples: Coppertone for sunscreen, Greyhound for bus service.

Supplemental Jurisdiction

Federal courts' jurisdiction under 28 U.S.C. § 1367 to hear state-law claims that share a common nucleus of operative fact with federal claims properly before the court. The court has discretion to decline supplemental jurisdiction under § 1367(c) in specified circumstances — most relevantly for California ADA cases, in “exceptional circumstances” presenting “other compelling reasons” under § 1367(c)(4), the ground the Ninth Circuit endorsed in Arroyo v. Rosas for Unruh damages claims paired with ADA injunctive claims.

T

Tag-Along Rights

A contractual provision that allows minority equity holders to participate in a sale by a majority holder on the same terms, preventing the majority from selling out without giving the minority an exit. The complement to drag-along rights. Tag-along rights are particularly important for minority investors in closely held California companies.

Tax Clearance Certificate

A certificate from a state tax agency (CDTFA, EDD, FTB, or county tax collector) confirming that the seller has no outstanding tax liability. Buyers in California asset transactions request clearance to limit successor tax liability.

Tester Plaintiff

A plaintiff who visits or accesses a business specifically to identify ADA violations and pursue litigation, rather than as a bona fide patron. Tester standing for ADA Title III claims is recognized in the Ninth Circuit (Civil Rights Educ. & Enf't Ctr. v. Hospitality Properties Trust, 867 F.3d 1093 (9th Cir. 2017)), but federal courts in other circuits have tightened standing for serial tester plaintiffs (Calcano v. Swarovski).

Thurston v. Midvale Corp.

Thurston v. Midvale Corp., 39 Cal.App.5th 634 (2019), is the leading California state-law precedent on website Title III nexus claims. The Court of Appeal affirmed summary judgment for a blind plaintiff against a restaurant whose website was incompatible with screen-reader software, holding that the Unruh Civil Rights Act applies through its § 51(f) tie-in to the ADA and that WCAG 2.0 is a recognized voluntary standard sufficient to defeat fair-notice arguments.

Trade Dress

The visual appearance of a product or its packaging that signifies the source — including shape, color, texture, graphics, and layout. Trade dress is protectable under the Lanham Act if it is non-functional and either inherently distinctive or has acquired secondary meaning. Famous trade dress examples include the shape of the Coca-Cola bottle and the layout of a restaurant chain.

Trade Secret

Information that derives independent economic value from not being generally known and that is the subject of reasonable measures to maintain secrecy. Protected under California's Uniform Trade Secrets Act (Civil Code section 3426 et seq.) and the federal Defend Trade Secrets Act.

Trademark

A word, phrase, symbol, or design that identifies and distinguishes the source of goods or services. Federal registration with the USPTO provides nationwide constructive notice; California also recognizes state and common-law marks.

Trademark Office Action

A letter from a USPTO examining attorney refusing or objecting to a pending trademark application. Common grounds: likelihood of confusion with an existing mark, descriptiveness, genericness, specimen problems, or identification-of-goods amendments. The applicant has six months to respond; failure to respond results in abandonment.

Triple Net Lease (NNN)

A commercial lease structure under which the tenant pays, in addition to base rent, the property's real estate taxes, insurance, and CAM/operating expenses. NNN leases shift most variable costs of the property to the tenant. Common in California retail and restaurant leases. The opposite structure is a gross lease, under which the landlord absorbs most of those costs.

Trustee

The person or institution that holds and administers trust property for the benefit of the beneficiaries. Subject to statutory and common-law fiduciary duties. The settlor often serves as initial trustee in a revocable living trust.

Trustor

Synonymous with settlor and grantor: the person who creates a trust and transfers property to the trustee. California's Probate Code uses settlor as the primary term; trustor is common in older instruments and in casual usage. The trustor's intent, as expressed in the trust instrument, controls administration.

TTAB (Trademark Trial and Appeal Board)

The administrative tribunal within the USPTO that hears trademark oppositions, cancellations, and ex parte appeals from final refusals. TTAB proceedings are quasi-judicial and follow rules patterned on the Federal Rules of Civil Procedure. TTAB decisions can be appealed to the Federal Circuit or filed as a civil action in district court.

U

Unruh Civil Rights Act

California Civil Code section 51 et seq., provides for $4,000 in statutory damages per violation in disability-access cases, in addition to whatever relief is available under the federal ADA. The principal driver of the financial pressure in California ADA litigation.

Unruh Civil Rights Act § 51(f)

California Civil Code § 51(f) provides that any violation of the federal ADA also constitutes an Unruh Civil Rights Act violation. This single sentence is the economic engine of California ADA litigation: it converts the federal Title III claim, which provides only injunctive relief and attorney's fees, into a state-law damages claim worth $4,000 per occurrence plus attorney's fees under § 52(a).

Use Clause

A commercial lease provision specifying the permitted use of the premises. Restaurants often have detailed use clauses regulating type of cuisine, service style (full-service vs. fast-casual), liquor service, hours of operation, and exclusive-use rights against competing tenants in the same center. The use clause both protects and constrains the tenant; changes to the business model may require landlord consent.

USPTO (United States Patent and Trademark Office)

The federal agency that examines and registers trademarks under the Lanham Act, 15 U.S.C. § 1051 et seq. USPTO registration provides nationwide constructive notice, the presumption of validity, the right to use the ® symbol, and access to federal court remedies including statutory damages in counterfeiting cases. State (California) trademark registration is much narrower in scope and effect.

V

Vesting

The process by which an equity holder earns the right to retain shares (or options) over time, typically through continued service. The standard structure for California startup founders and employees is four-year vesting with a one-year cliff: 25% of the equity vests after one year of service, with the remaining 75% vesting monthly over the next three years. Unvested equity is typically subject to forfeiture or repurchase if the holder leaves the company.

Viking River Cruises

Viking River Cruises, Inc. v. Moriana (2022), the U.S. Supreme Court decision holding that the FAA preempts Iskanian's bar on arbitration of individual PAGA claims. Adolph v. Uber later clarified that California-court standing for the representative portion survives.

W

W-2 Employee

A worker classified as an employee for federal tax purposes and reported on Form W-2. Distinguished from independent contractors (reported on Form 1099-NEC). California's ABC test (Labor Code section 2775) presumes employee status unless the hiring entity proves all three prongs of the test. Misclassification of a worker as a 1099 contractor when the worker is properly a W-2 employee can trigger wage-and-hour exposure, employment-tax liability, and PAGA claims.

WCAG 2.1 Level AA

Web Content Accessibility Guidelines version 2.1, Level AA, are the W3C's technical accessibility standard. WCAG 2.1 AA is the de facto compliance benchmark for ADA Title III website cases in California, even though the DOJ has not promulgated formal Title III website regulations. The DOJ's April 2024 Title II rule formally adopts WCAG 2.1 AA for state and local government websites. Trial courts routinely impose WCAG 2.1 AA conformance as injunctive relief in California ADA cases.

Will

A document directing the disposition of a person's estate at death. In California, a will alone does not avoid probate; the estate generally proceeds through the probate court for distribution under the will's terms.