Law For Small Business (Management 349)

1. Law For Small Business (Management 349) Licenses and Permits (Chapter 7) Professor Charles H. Smith Fall 2011

2. Need for and types of licenses and permits in business • Need for license/permit – every business, no matter what size or type, will need at least one license/permit and, in some situations, may need many licenses/permits. • Licenses/permits can be federal, state or local. • Business owner/management responsible for ascertaining (1) which license(s)/permit(s) needed and (2) if license(s)/permit(s) even available. • Best information sources re necessary license/permits – government agency responsible for issuing license/permit, chamber of commerce, attorney, mentor, trade association, competitor.

3. Purposes of licenses and permits • Government agency(ies) often charged with regulation responsibility • Administrative body may have power to receive, investigate and render discipline re consumer complaints; e.g., State Bar. • Government interest in regulating number and/or types of businesses by general region and/or specific location • Common example is limits on businesses selling booze, cigarettes or porn such as number per area or distance from school.

4. Purposes of licenses and permits cont. • Government can also raise funds • Especially true at local level since little or no regulation involved except for home-based businesses and zoning. • Possible criminal prosecution if no license; lack of license can be used to shut down business suspected of other illegal activity; e.g., City of Long Beach and medical marijuana dispensaries.

5. Examples of federal licenses and permits • Every business needs tax registration/ID number from the IRS; might be owner’s SSN in case of sole proprietorship. • Examples of federal agencies which issue licenses/permits and perform regulatory activities – SEC (investment advisors), FDA (preparation of meat products or production of drugs), ATF (tobacco or alcohol products, firearms), FCC (TV or radio). • Most small businesses need not be concerned with federal licenses/permits except for the IRS tax registration/ID number.

6. Examples of state licenses and permits • License for occupation/profession, such as doctor, lawyer, real estate broker/agent, barber/beautician/manicurist. • License for product sold, such as liquor license. • Environmental regulation, such as Coastal Commission permit (approval) needed for development near California coastline.

7. Examples of local licenses and permits • Local property taxes – assessed by county. • Other local taxes, such as bed taxes for hotels. • Health/environmental permits, such as restaurant inspection. • Crowd control involving business or event with gathering of people, such as bar, parade, or athletic or social event on city streets or in public park. • Building permits – goal is compliance though civil or even criminal action may become necessary. • Zoning regulations – can your business even operate at your chosen location?

8. Dealing with government regarding licenses and permits • Work with government agency/officials, such as building inspector or zoning board, as a team instead of making it adversarial. • Government goal is usually compliance with the law. • Government usually will work with you if you demonstrate interest in achieving total compliance or at least compromise as to compliance. • Retain attorney if legal issues and/or other difficulty in dealing with government yourself.

9. Dealing with government regarding licenses and permits cont. • Despite attempt(s) at compliance, what if no resolution can be reached? • Seek informal community support. • Negotiation with government agency. • Retain attorney (if have not already done so). • Legal action (see following slides).

10. Dealing with government regarding licenses and permits cont. • What if license or permit denied, suspended or revoked? • Comply with decision (even if pending administrative appeal or court action) – otherwise, gov’t may bring criminal prosecution. • Administrative remedies • General rule is all administrative remedies must be “exhausted” before resort to courts. • Administrative remedies can include informal and/or formal hearing(s). • Exhaustion not required (1) for federal civil rights claims or (2) if constitutionality of the administrative agency itself or its procedures is challenged. • Go to court – petition for writ of mandate (state court) and/or complaint for damages (state or federal court) – see following slides.

11. Going to court if administrative remedies are exhausted • Petition for writ of mandate • Seeks immediate judicial relief re denial, suspension or revocation by asking court to order government to grant application for or reinstate license/permit. • Quick, streamlined proceeding – must be filed within 90 days of denial, suspension or revocation and can be heard within a few months of filing; no right to jury trial, instead is heard as motion with no live testimony; see C.C.P. § 1094.5 et seq. • Complaint for damages • Seeks money for injury to business caused by denial, suspension or revocation of license/permit (whether temporary or permanent). • Usual litigation chronology and procedures.

12. Importance of proceedings re petition for writ of mandate • Petition for writ of mandate required if challenge to unfavorable administrative decision/findings desired • If no petition filed, then unfavorable administrative decision/findings will be binding in any subsequent related legal action (e.g., complaint for damages) since administrative proceedings are “quasi-judicial” (notice and hearing provided) even if procedures/admission of evidence may be informal. • This is called res judicata (claim preclusion) or collateral estoppel (issue preclusion). • If petition for writ of mandate filed but dismissed/denied – binding re subsequent related legal action except for Title VII claims.