Hilary Bricken on January 30 at “Take Me To Your Dealer: A KCRW Joint”

It’s been a crazy two years since California legalized adult-use cannabis with the passing of Prop 64 and the adoption of the Medicinal and Adult-Use Cannabis Regulation and Safety Act.

On Thursday, January 30th, our own Hilary Bricken will join KCRW’s cannabis round table to discuss the industry’s evolution and future. This is a rare opportunity for anyone interested in the dynamic cannabis regulatory and business scene to sit down with some of the industry’s most influential figures, and we hope you got your tickets. While tickets to the live event have already sold out, the round table discussion will be recorded with plans to broadcast at a later date.

“Take Me To Your Dealer” is part of the ongoing KCRW @Home series dedicated to hosting “intimate discussions and workshops” relevant to the Southern California community. To learn more about this series, visit the KCRW events page.

Thursday, January 23, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Thursday, January 23, 2020 | Curated by host Shea Gunther

// ‘Cruel and unusual’: Kansas resident faces decades in prison for medical marijuana use (Leafly)

// 40% of All US Drug Arrests in 2018 Were For Weed Possession (Merry Jane)

// Marijuana Legalization Will Advance In Connecticut This Year, Top Lawmakers Say (Marijuana Moment)


These headlines are brought to you by Curaleaf, one of the leading vertically-integrated cannabis operators in the U.S. With legal medical marijuana dispensaries, cultivation sites, and processing facilities all over the United States, Curaleaf has served more than 165,000 medical cannabis patients and looks forward to helping many more long into the future. Swing over to Curaleaf.com to learn more about this very cool company!


// Oregon’s Cannabis Sales Continue To Climb (Green Market Report)

// New Vermont Bill Would Decriminalize Psychedelics And Kratom (Marijuana Moment)

// Is Constellation Brands Making a Big Mistake? (Nasdaq (Motley Fool))

// Congressman Visits Marijuana Dispensary On Behalf Of Bernie Sanders’s Presidential Campaign (Marijuana Moment)

// Mexican Lawmakers Plan To Pass Amended Marijuana Legalization Bill Before End Of April (Marijuana Moment)

// Illinois adult-use cannabis stores might face more shortages (Marijuana Business Daily)

// OLCC’s Drawn Out Application Process A Burden To The Industry (Bend Source)


Check out our other projects:
Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement.
Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

Love these headlines? Love our podcast? Support our work with a financial contribution and become a patron.

Photo: Dominic Milton Trott/Flickr

State of the State: Washington Regulators Turning a New Leaf (Part 1)

Last year brought significant changes to Washington cannabis via the legislative session. Today I’ll outline some of the ways the Washington State Liquor and Cannabis Board (“LCB”) plans to regulate marijuana in 2020. Before I get into the details let me please encourage you to check out Cannabis Observer, who goes to every LCB meeting and provides details free of charge each week online.

This is part one in a two-part series. Today we’ll outline changes related to how the LCB is going to handle potential violations. Next, we’ll dive into penalties related to marijuana violations. In both cases, I’ll be analyzing proposed rules so things are subject to change.

Senate Bill 5318 went into effect last year and requires that the LCB move over from an enforcement-based approach to marijuana regulation to a compliance-based approach. In light of SB 5318, the LCB is retooling its rules, codified at WAC 314-55 et seq. In November 2019, LCB Policy and Rules coordinator Kathy Hoffman issued a paper (link provided by Cannabis Observer) on enforcement of marijuana regulations. Hoffman’s paper outlined the directives of SB 5138:

  • Specified when the Board may issue a notice of correction under a technical assistance program. This rule proposal establishes and frames the notice of correction; a separate rule project is underway to establish the technical assistance program in alignment with the directives of ESSB 5318;
  • Expanded on existing programs for compliance education;
  • Required rule making regarding penalties, with limits, such as the effect of
    cumulative violations;
  • Specified the types of violations that may result in license cancellation;
  • Required consideration of aggravating and mitigating circumstances;
  • Provides that the terms of a settlement agreement entered into by a licensee and hearing officer or designee of the Board be given substantial
    weight by the Board;
  • Allowed a licensee to correct violations unrelated to public health and safety within a reasonable amount of time.

The LCB has proposed or amended several sections of WAC 314-55 following these directives. Yesterday (January 22, 2020) the LCB adopted rules relating to marijuana penalties. The following are some highlights of the substantial changes and the new rules can be found here (thanks again to Cannabis Observer):

  • New Section: WAC 314-55-502 – Notice of Correction – This will  create a process for the LCB to issue notices of correction(“NOC”) to marijuana licensees in lieu of civil penalties. The NOC would state the noncompliant condition in detail including the regulation at issue, a statement of what is required to achieve compliance and a date when compliance must be met, a contact for technical assistance from the LCB, notice of when, where, and to whom a request to extend the time to achieve compliance for good cause should be filed. The rule states that a NOC is not an enforcement action but if a licensee doesn’t comply with a notice, the LCB may issue an administrative violation notice (“AVN”).
  • Amended Section: WAC 314-55-505 – Administrative Violation Notice – This rule outlines when the LCB may forego a NOC and issue an AVN, under three specific scenarios:
    • When a licensee has previously been given notice of or been subject to, an enforcement action for the same or similar violation of the same statute or rule;
    • When compliance is not achieved by the date established by the Board in a previous notice of correction and if the Board has responded to a request for review of the date by reaffirming the original date or establishing a new date; or
    • When the Board can prove beyond a preponderance of the evidence that any of the following violations have occurred;
      •  Diversion of marijuana product to the illicit market or sales
        across state lines;
      • Furnishing marijuana product to minors;
      • Diversion of revenue from the sale of a marijuana product to criminal enterprises, gangs, cartels, or parties not qualified to
        hold a marijuana license based on criminal history requirements (it’s significant that this is based on criminal history meaning that NOC would still need to be issued for revenues diverted to parties not qualified to hold a marijuana license for other reasons, such as residency);
      • The commission of nonmarijuana-related crimes; or
      • Knowingly making a misrepresentation of fact related to
        conduct or an action that is, or is alleged to be, any of the
        preceding four violations.
  • New Section: WAC 314-55-5055 – Resolution Options – This rule will replace WAC 314-55-510, which currently governs a licensee’s options after an AVN is issued. The rule describes a licensee’s options for responding to an AVN including timelines (20 days to respond) and penalties for failing to pay monetary fines. The rule states that the LCB will not renew a license if there are two or more outstanding monetary fines in a two-year period, which may not comply with SB 5318 which states that LCB rules “[m]ay include cancellation of a license for cumulative violations only if a marijuana licensee commits at least four violations within a two-year period of time;” which is now codified at RCW 69.50.562 (1)(c). It seems likely that a court will eventually rule on whether the LCB’s decision not renew is a license cancellation. The rules also outlines how to request a settlement conference, what’s included in a settlement agreement, and how to defer a penalty.

It’s reassuring to see the LCB implementing a policy that favors compliance over enforcement. Stay tuned next week for part two in the series!

Wednesday, January 22, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Wednesday, January 22, 2020 | Curated by host Shea Gunther

// Rumors Are That MedMen Is Unable To Pay Vendors (Green Market Report)

// New Mexico Governor Says It’s ‘High Time’ To Legalize Marijuana (Marijuana Moment)

// Arizona climate blamed for ‘off the charts’ THC failure in first hemp crops (Marijuana Business Daily)


These headlines are brought to you by Curaleaf, one of the leading vertically-integrated cannabis operators in the U.S. With legal medical marijuana dispensaries, cultivation sites, and processing facilities all over the United States, Curaleaf has served more than 165,000 medical cannabis patients and looks forward to helping many more long into the future. Swing over to Curaleaf.com to learn more about this very cool company!


// New York Governor Includes Marijuana Legalization In New Budget Plan (Marijuana Moment)

// Colorado Tries to Beckon Tourists With Buy-and-Try Pot Lounges (Bloomberg Government)

// 1 in 13 Oklahoma Adults Are Now Using Medical Marijuana Legally (Merry Jane)

// New Zealand to overturn cannabis vaporizer ban, clearing the way for imports (Marijuana Business Daily)

// Free Weed: Sicily Is No Longer Charging Patients for Medical Cannabis (Merry Jane)

// Pete Buttigieg wants to end the war on weed- but not in South Bend (Leafly)

// Chart: Florida sales of smokable marijuana topped 22,000 pounds in less than six months (Marijuana Business Daily)


Check out our other projects:
Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement.
Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

Love these headlines? Love our podcast? Support our work with a financial contribution and become a patron.

Photo: Chris Goldberg/Flickr

This Psilocybin Patent Could Be a Really Big Deal

Last week, COMPASS Pathways announced its acquisition of US Patent No 10,591,175. What does that patent cover? Psilocybin! More specifically, COMPASS has locked down “methods of treating drug-resistant depression with a psilocybin formulation.” The company is also running a phase IIb clinical trial of its patented formulation, COMP360, which we covered in a blog post back in 2018. In that post, I explained how the Food and Drug Administration (FDA) approval process works and why this trial is so interesting and important.

COMP360 is not the only patent application related to psilocybin, but it has generated a lot of press. Some of that press includes scare articles related to a “millionaire couple threatening to create a magic mushroom monopoly.” Other observers take a more measured position, examining the COMP360 application in detail, and concluding that “the only monopoly sought by Compass Pathways is for the right to make, use or sell their extremely narrow and specific forms of psilocybin.” These analysts posit that psilocybin research and commerce will not be affected in any meaningful way by COMP360, including for sale of “any varieties of magic mushrooms.”

Patents with narrow claims are easier to obtain and enforce. Assuming that is the case with psilocybin, the COMPASS effort should have no direct impact on decriminalized psilocybin in places like Oakland and Denver, or broader legalization efforts here in Oregon. Still, the fallout from patents—and especially drug approvals—for controlled substances can be hard to predict. When clinical trials began for cannabidiol (CBD), for example, no one could have foreseen the impact that FDA’s eventual approval of Epidiolex would have on the legality of CBD as a food or dietary supplement. Back then, no one knew CBD consumer products would be a thing.

Will the country be overrun by a wave of food, beverage and other products containing psilocybin sometime in the next decade? It seems unlikely, even if microdosing continues to trend. Psilocybin is a very different chemical than CBD, primarily for its psychoactive properties. In addition, psilocybin (along with psilocin) is included in Schedule I of the federal Controlled Substances Act and in Schedule I of the United Nations Convention on Psychotropic Substances. For psilocybin to have a broad path forward, it would have to be descheduled and decriminalized, just as hemp was here in the United States.

Ultimately, it is important not to lose sight of what COMP360 is actually for: treating drug-resistant depression. As I wrote previously, around 100 million individuals suffer from treatment-resistant depression worldwide. This means that nothing works– not antidepressants, not psychological counseling, not even grisly procedures like electroconvulsive therapy. Almost everyone knows someone who has suffered from this disorder.

If COMP360 performs well in current trials, a lot of people stand to benefit. COMPASS will benefit as well by raking in the profits, just as GW Pharma is doing today with Epidiolex. That seizure drug returned $296 million in revenues in a stellar launch year. Remember too that COMP360 is a depression drug: its ceiling is probably much higher.

Hopefully COMP360 expands rather than limits the seemingly vast potential of magic mushrooms. If it does not, the fallout will be deeply felt. Even compared to the cannabis community, the magic mushrooms crowd is decidedly anti-corporate and impassioned with respect to ownership claims on the compound. Psilocybin advocates will be watching COMPASS closely.

We will continue to track COMP360 and psilocybin in general. For more on psilocybin, check out the following posts:

Tuesday, January 21, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Tuesday, January 21, 2020 | Curated by host Shea Gunther

// Proposed 10% THC Limit in Washington Could Wreck Its Entire Weed Industry (Merry Jane)

// Joe Biden Again Says No To Marijuana Legalization Without More Studies (Marijuana Moment)

// ‘Suffering’ medical pot patients have seen supply dwindle for months: ‘There’s literally nothing’ (Chicago Sun-Times)


These headlines are brought to you by Curaleaf, one of the leading vertically-integrated cannabis operators in the U.S. With legal medical marijuana dispensaries, cultivation sites, and processing facilities all over the United States, Curaleaf has served more than 165,000 medical cannabis patients and looks forward to helping many more long into the future. Swing over to Curaleaf.com to learn more about this very cool company!


// Large Florida medical cannabis retailer stops most deliveries (Marijuana Business Daily)

// Canopy Growth Revises Beverage Launch Timeline (New Cannabis Ventures)

// Marijuana firm TILT backs off of strict contracts under pressure from state CCC (Boston Globe)

// Pot taxes in Chicago could be as high as 41% by July as county moves forward with 3% levy (Chicago Sun-Times)

// Oregon cannabis sales soar along Idaho border (Marijuana Business Daily)

// Company Gets Trademark For The Word ‘Psilocybin,’ Frustrating Decriminalization Advocates (Marijuana Moment)

// It’s MLK Day. Don’t Forget Cannabis is a Civil Rights Issue. (Canna Law Blog)


Check out our other projects:
Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement.
Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

Love these headlines? Love our podcast? Support our work with a financial contribution and become a patron.

Photo: Weed Porn Daily/Flickr

Does Your Cannabis Business Qualify for Trademark Protection? The Answer is Most Certainly “Yes!”

We try to cover cannabis-related trademark issues thoroughly on this blog, because branding and trademark protection form the most basic foundation for most businesses. In our most recent posts, we’ve focused heavily on trademark disputes, because as the industry matures, litigation has become inevitable. For reference, you can check out some of the big trademark disputes from the last couple of years here:

But what we haven’t done recently is a recap of the trademark basics for cannabis companies, as well as a rundown on the updates regarding what products are and aren’t eligible for protection. There have been some positive changes in the last year with the implementation of the 2018 Farm Bill – the USPTO released updated guidance regarding the registration of hemp-related trademarks, which can be found here.

I’ll give a brief overview of the cannabis trademark landscape, but at this point, I think it’s safe to say that nearly every cannabis company has at least something that should be the basis for obtaining trademark protection.

Trademarks 101: A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. More commonly, a trademark is recognized as a brand. The importance of trademarks is two-fold: On one hand, owners of successful brands want to rest assured that other parties will not be able to use and exploit their brand without the brand-owner’s permission. But on the other, perhaps more important hand, trademarks are crucial from a consumer protection standpoint. As a society, we want consumers to know where the goods and services they purchase are coming from, and to make informed purchasing decisions based on factors like quality and safety. The primary way consumers are able to distinguish the goods of one company from the goods of another is via branding.

There are three ways in which a brand owner can establish trademark rights:

  1. By using the mark in connection with their goods or services (legally) in commerce;
  2. By registering the mark with the United States Patent and Trademark Office (USPTO); and
  3. By registering the mark with an appropriate state trademark registry.

Registering a trademark with the USPTO is the best way to protect one’s mark, but because cannabis is still illegal under federal law, and because one requirement for registration of a federal trademark is that the applicant has made “legal use” of the mark in commerce, the USPTO has continually refused to register marks for use on cannabis and any other goods and services that violate the Controlled Substances Act (CSA).

The crux of the analysis for any cannabis company’s federal trademark eligibility is whether or not the company sells goods or offers services that comply with federal law. To the extent that it does, those goods or services are likely eligible for trademark protection. In addition, to the extent that a company is selling products that comply with both the Controlled Substances Act (CSA) and the Food Drug and Cosmetic Act (FDCA), those products are likely eligible as well. For example, while the FDA maintains that CBD cannot be added to food products without violating the FDCA, its position on CBD in topical products is quite different. Those products, as long as they comply with the 2018 Farm Bill, are likely eligible for trademark protection. Likewise, certain hemp products are Generally Recognized As Safe (GRAS) by the FDA – these products, including hemp seed oil, for example, are also eligible for federal trademark protection.

For products that do not meet the threshold for federal trademark protection, there’s a good chance that state protection is available. Though the protection afforded by a state trademark is geographically limited to the state of the registration (and sometimes just the area of use within that state), state trademarks usually provide more extensive geographic protection and legal remedies than common law rights. Common law rights are almost always limited to the geographic area in which you are using the mark, meaning that if you only do business in San Francisco, your common law trademark rights could only protect you within the city of San Francisco. And if you want to avail yourself of the statutory remedies available to trademark owners in infringement cases, you will need to register your mark.

While trademark protection in the cannabis industry still presents challenges for business owners, the law is in constant flux, and opportunities are beginning to emerge. If you haven’t worked with your cannabis intellectual property lawyer to develop a strategy for protecting your trademarks now and going forward, now is the time to do so.

It’s MLK Day. Don’t Forget Cannabis is a Civil Rights Issue.

Happy MLK Day!

For our international readers, Martin Luther King, Jr. Day is a federal U.S. holiday marking the birthday of its eponymous civil rights hero. Dr. King was the chief spokesperson for nonviolent activism in the Civil Rights Movement, which successfully protested racial discrimination in federal and state law. Dr. King was assassinated in 1968, four years after the passage of one of the great U.S. laws of the 20th century, the Civil Rights Act of 1964. His death also came two years prior to one of the 20th century’s most controversial and insidious laws, the Controlled Substances Act of 1970 (CSA).

The CSA is a half-century old this year, and it’s looking much worse for the wear. We have commemorated MLK Day each of the past few years on this blog by examining the status of cannabis and civil rights. In short, things were bad, are bad, and are not improving quickly enough (if at all). Marijuana arrests continue to track upward despite more states legalizing distribution and sale of the plant, and despite broad non-enforcement of federal law.

We did see promising expungement efforts around the country last year, from San Francisco to Illinois to New York. But that is not enough. The War on Drugs persists in insidious ways, particularly with respect to black and Latino Americans. This includes everything from disproportionate incarceration to disenfranchisement under “progressive” new laws, like the 2018 Farm Bill.

In each of 2018 and 2019 we observed that Dr. King died 50 years ago, but his legacy continues to resonate and expand. The year 2020 will be politically momentous: let’s hope that state and federal governments finally turn the corner. Not only should cannabis be decriminalized once and for all, but the leaders among us should strive to make amends for a half-century of failures.

Hemp CBD Across State Lines: New Mexico

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) legalized hemp by removing the crop and its derivatives from the definition of marijuana under the Controlled Substances Act (“CSA”) and by providing a detailed framework for the cultivation of hemp. The 2018 Farm Bill gives the US Department of Agriculture (“USDA”) regulatory authority over hemp cultivation at the federal level. In turn, states have the option to maintain primary regulatory authority over the crop cultivated within their borders by submitting a plan to the USDA.

This federal and state interplay has resulted in many legislative and regulatory changes at the state level. Indeed, most states have introduced (and adopted) bills that would authorize the commercial production of hemp within their borders. A smaller but growing number of states also regulate the sale of products derived from hemp.

In light of these legislative changes, we are presenting a 50-state series analyzing how each jurisdiction treats hemp-derived cannabidiol (“Hemp CBD”). Today we head to New Mexico.

In 2017, New Mexico enacted Senate Bill 6, which established an industrial hemp program. The bill tasked the New Mexico Department of Agriculture (“NMDA”) with overseeing the production of the crop.

Two years later, state lawmakers passed House Bill 581, codified, in part, at N.M.S.A. § 76-24, which provides a regulatory framework for the manufacture of Hemp CBD products, also known as “hemp finished products.” A “hemp finished product” is “a hemp product that is intended for retail sale and containing hemp or hemp extracts that includes food, food additives and herbs for human use, including consumption, that has a THC content of not more than three-tenths percent.” Unlike industrial hemp, hemp finished products are regulated by the New Mexico Environment Department (“NMED”).

Following the enactment of House Bill 581, the NMED began the rulemaking process and issued the first set of proposed rules (“Emergency Rules”), which are scheduled to remain in effect through January 31, 2020. On December 2, 2019, the agency held a meeting for public comments to discuss the proposed final rules, but these rules won’t be adopted for at least a few more weeks – at least not until the Emergency Rules expire.

Both the Emergency Rules and proposed final rules require state extractors, processors, manufacturers and wholesalers to secure a permit from the NMED and meet certain manufacturing requirements to operate a hemp facility where hemp finished products intended “for human ingestion, absorption, or smokable products” are produced.

Note, however, that the proposed final rules intend to remove “food, food additives and herbs” from the definition of hemp finished product.” This suggests that the NMED wants to align its rules with the Food and Drug Administration’s policy on the sale and marketing of these products.

But for the time being, the manufacture, sale and marketing of food products seems allowed. Pursuant to House Bill 581 and the Emergency Rules, products intended for human consumption by eating or drinking are subject to the provisions of the Food Service Sanitation Act and the New Mexico Food Act (“NMFA”) but are not deemed adulterated. These products must also meet applicable labeling requirement in the NMFA and 21 C.F.R. 101 et seq. (food labeling).

The sale and marketing of smokables and cosmetics is not expressly authorized nor restricted but the Emergency Rules and proposed final rules mandate that these products meet applicable federal labeling requirements.

In addition to meeting federal labeling requirements, all categories of products must meet certain labeling and marketing requirements, including but not limited to:

  1. Clearly identity on the front display panel:
    1. CBD content in the package, labeled in milligram; and
    2. Total THC content in the package, labeled in milligrams.
  2. Unless otherwise approved, statements representing or inferring a hemp finished product contains no THC are prohibited.
  3. Hemp facilities shall design, maintain and use a coding system that will identify the date and place of manufacture of each hemp product that shall be clearly visible on the product label or securely affixed to the body of the container.
  4. No more than 0.3% Total THC concentration and meet other specific testing requirements.
  5. Contain no health, medical or benefit claims on the label.

Therefore, for the time being, New Mexico seems rather friendly toward the manufacture, sale and marketing of Hemp-CBD products. This could always change once the proposed final rules go into effect.

For previous coverage in this series, check out the links below:

California Cannabis Claims: Breach of Fiduciary Duty

Welcome back to our litigation series on California cannabis claims. We’re continuing today with a cause of action we unfortunately commonly see in cannabis litigation: the breach of fiduciary duty.

Introduction

A fiduciary relationship exists between parties when at least one of the parties is, in duty, bound to act with the utmost good faith for the benefit of the other party. Meaning, if you’re classified as a fiduciary (either under statute, or by virtue of an agreement you have signed), you MUST act in good faith for the benefit of the other party on any matter within the scope of your relationship. This encompasses sub-duties, like managing the subject matter with “due care,” providing an account to the beneficiary, or keeping the beneficiary fully informed.

Statute of Limitations

Subject to certain exceptions, the California statute of limitations on a breach of fiduciary duty claim is four years. One exception we see often, and is worth mentioning here, is when the essence of the claim is that the defendant’s act constituted actual or constructive fraud – in that case, the claim is actually subject to California Code of Civil Procedure s. 338’s three-year statute of limitations period.

Elements of a Breach of Fiduciary Duty Claim

The elements of a breach of fiduciary duty cause of action are: (1) the existence of a fiduciary relationship, (2) breach of the same, (3) damage (4) caused by that breach.

  1. Existence of a fiduciary relationship: California case law has come a long way in recognizing certain relationships or transactions as establishing fiduciary relationships. In general terms, a fiduciary duty under common law can arise in any situation where “one person enters into a confidential relationship with another.” The most common fiduciary relationships in the business context are:
  • Corporate officers and directors toward corporation and shareholders;
  • Controlling shareholders toward minority shareholders;
  • Partner toward partner: “In all proceedings connected with the conduct of the partnership every partner is bound to act in the highest good faith to his copartner and may not obtain any advantage over him in the partnership affairs by the slightest misrepresentation, concealment, threat or adverse pressure of any kind.” Enea v. Sup.Ct. (2005) 132 Cal. App. 4th 1559, 1564; and
  • Joint venturer toward co-joint venturer.
  1. Breach of fiduciary duty: to have a valid claim, the plaintiff must prove that the defendant breached its fiduciary duty. This is a question of fact, so make sure you have concrete documentation and other evidence.
  2. Causation: the plaintiff must then demonstrate that the defendant’s breach proximately caused the plaintiff’s damages.
  3. Damages: finally, the plaintiff must demonstrate its damages.

Remedies

Under a valid breach of fiduciary duty claim, both legal and equitable remedies are available:

  1. Legal Remedies
  • Compensatory damages: compensation for all the plaintiff’s harm caused by the breach.
  • Punitive damages: unlike under a breach of contract claim, punitive damages can be awarded if the court is satisfied, by clear and convincing evidence, that the defendant is guilty of oppression, fraud or malice.
  1. Equitable Remedies
  • Accounting: if, for example, your partner was in charge of handling your business’ funds and it’s unclear how much money was stolen over a one-year period, the court can order an accounting to be complete.
  • Constructive trust: if a defendant has obtained property by violation of a fiduciary relationship, the court may impose a constructive trust to compel the transfer of that property back to its rightful owner.
  • Disgorgement of profits: if a defendant profits from transactions it conducted as a fiduciary, another proper measure of damages is full disgorgement of any secret profit made by the defendant.

Stay tuned next week, when I plan to cover one of the sexier claims: fraud.  Part one of this series covered breach of contract, and you can find that here.