November 22, 2005
Did Roger Simon Form a Partnership With Dennis the Peasant?
Posted by Gordon Smith

We have been quiet on Open Source Media, which is now Pajamas Media ... again. Frankly, I have a hard time getting excited about this story, though with a little encouragement from Ann, I did notice a business organizations angle. Take a look at Dennis the Peasant's account of his dealings with Roger Simon. The story bears a striking resemblance to the facts of Urban Decay, where a California appellate court held that two women who developed ideas for a cosmetics company had formed a partnership. Roger Simon responds:

Mr. Kelly [aka Dennis the Peasant] believes that somehow Charles Johnson and I have knifed him in the back in a business deal. He is indeed correct that we had several discussions with him and one meeting in Los Angeles. After that nothing substantive occurred. No contracts were ever signed. No investment was made. Nothing happened. Communications dwindled to zero. It was like the many preliminary business conversations that peter out before fruition in most of our lives, certainly in mine and probably in yours. Then Charles and I developed a different approach to the business. We found investment elsewhere and Mr. Kelly, when he heard about it, turned into an online stalker. He has threatened to sue me on several occasions. I invite him to go ahead and do it. I look forward to the contents of his website being read aloud in court.

Whether contracts were signed is irrelevant to the existence of a partnership. Same goes for the investment. But the portion of Simon's statement that I have italicized could be a crucial difference between Pajamas Media and Urban Decay. The key inquiry: Is Pajamas Media a different business than the one envisioned during those early talks between Simon, Kelly, and Johnson? If it is the same business, I could see a pretty strong argument for partnership under Urban Decay.

Stepping away from the result in Urban Decay, I think that Simon lands on the core issue in many cases involving inadvertant formation of a partnership, namely, whether the initial negotiations constitute formation of a business or merely preparation for incorporation. Every corporation or LLC is preceded by some planning, but such planning does not necessarily result in the formation of a partnership.

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"Dennis the Peasant's backstory on Tulip Advertising, which became Pajamas Media, which became Open S ..." [more] (Tracked on November 27, 2005 @ 12:34)
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