According to one California observer, the “list of businesses abandoning California for more hospitable business environments reads like a roll call of top companies.” That corporations have been fleeing California’s escalating costs and over-the-top regulation is not all that surprising. But few may be aware of one of the Golden State’s more creative efforts to reverse that trend: enacting laws that force companies to incorporate in California if they want to do business there.
The U.S. Court of Appeals for the Ninth Circuit recently took up—and overturned—one such law in Nationwide Biweekly Admin. v. Owen. The case arose from Nationwide’s biweekly mortgage loan repayment program, which facilitates homeowners with mortgages who wish to make 13 monthly mortgage payments a year, ostensibly reducing a 30-year mortgage into a 23.9-year mortgage.