The Nebulous Meaning Of "Small Business" In New Ban On Commercial Loan Fees

Beginning in January, "covered entities" will be prohibited from charging specified fees in connection with a commercial financing transaction with a "small business" or "small business" owner.  Cal. Stat. ch. 881 (SB 666).  Although relatively brief, there are many ins and outs to this new law, including several defined terms such as "commercial financing" and "covered entity".  There are also several significant exemptions to this ban.  Today's post, however, will cover only the new law's clumsy definition of "small business":

 “Small business” means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and that, together with affiliates, has 100 or fewer employees and average annual gross receipts of fifteen million dollars ($15,000,000) or less over the previous three years.

Cal. Civ. Code § 1799.300(j)

This definition is problematical for several reasons.  First, what does it mean to be "independently owned and operated"-   independent from whom or what?  Would a business operating under a franchise agreement, for example, be considered to be "independently operated"?  Second, when is a business "not dominant in its field of operation"?  Does "field of operation" refer to geography, market share , or both?  Does a business qualify as "dominant" if it is the largest business in its field of operation but does not control 50% or more of its field of operation?

Carole King, John Denver and James Joyce?

A few readers may have picked up on my appreciation for the themes and linguistic creativity of James Joyce's Ulysses.  Recently, I noticed a connection among the seventh chapter of Ulysses known as Aeolus and popular singer songwriters Carole King and John Denver.  Aeolus was the Greek deity in charge of the winds.  The Aeolus chapter takes place in the printshop and offices of two Dublin newspapers and Joyce deploys numerous crossheads throughout the chapter to mimic the headings used in newspapers.  Thus, he uses writing not only to describe the scene but also to depict the scene.  One of these crossheads is  "Rhymes and Reasons".  Both singers entitled albums "Rhymes and Reasons" and John Denver also wrote a song by that name.   It is possible that neither singer read Ulysses and they simply stumbled onto the same alliterative phrase.  However, I like to think the album names were literary tributes to Joyce.