iIt is that time of year when both the professional and general press feature stories about new laws that will be taking effect. As I survey the California legislature's handiwork in 2023, I have identified the following themes:
Tautology. SB 699 (Cabellero) adds Section 16600.5 to Chapter 1, Part 2, Division 7 of the California Business & Professions Code. Chapter 1 begins with Section 16600 which has provided since 1941 that "Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." Subdivision (a) of new Section 16600.5 therefore adds nothing by providing "Any contract that is void under this chapter is unenforceable". Was it really necessary to state that a void contract is unenforceable?
Failure to Respect the Boundaries of Others. Subdivision (b) of Section 16600.5 prohibits an employer from or former employer from attempting to enforce a contract that is void under this chapter "regardless of whether the contract was signed and the employment was maintained outside of California". This provision is entirely unmoored from any connection to California, omitting any requirement that the employer have some connection to California. If applied literally, this statute would prohibit an employer in another state from enforcing a non-compete that is enforceable under that state's laws even when the employer and the employment contract have no connection to California.
Overbreadth. AB 853 (Maienschein) is ostensibly directed at mergers and acquisitions of grocery and drug stores, but the legislature failed to so cabin its application. New Corporations Code Section 14700(a) provides:
No person shall acquire, directly or indirectly, any voting securities or assets of a retail grocery firm or retail drug firm unless both parties give, or in the case of a tender offer, the acquiring party gives, written notice to the Attorney General in accordance with this part.
Inventory is an asset of a grocery. Thus, a person who buys a loaf of bread is acquiring an asset of a retail grocery firm. Also, the bill would require a person who acquires even a single share of a retail grocery firm or retail drug firm to provide written notice to the Attorney General. It beggars belief that the legislature actually intends to impose this requirement but if the bill is enacted in its present form that is what the bill will expressly and unambiguously require.
Failure to Respect Constitutional Restraints. The California legislature has of late adopted the tactic of driving behavior by compelling speech. SB 253 (Wiener), for example, compels disclosure of greenhouse gas emissions and SB 261 (Stern) requires disclosure of climate-related financial risks. Both of these requirements clearly compel speech arguably in contravention of the First Amendment to the U.S. Constitution. Rumsfeld v. Forum for Academic and Institutional Rights, Inc., 547 U.S. 47, 61 (2006) ("Some of this Court's leading First Amendment precedents have established the principle that freedom of speech prohibits the government from telling people what they must say.").
