Revisions to the North Carolina Rules of Civil Procedure became effective to actions filed on or after October 1, 2011. A blacklined version showing the changes wrought by a law titled an "Act to clarify the procedure for discovery of electronically stored information and to make conforming changes to the North Carolina Rules of Civil
Another Preliminary Injunction For Breach Of Fiduciary Duty
For the second time in a space of two weeks, the Business Court granted a motion for a preliminary injunction against an LLC member/manager as a result of breaches of fiduciary duty. The first case was GoRhinoGo, LLC v. Lewis, which I blogged about last week, and the second case, decided last Thursday, was
Company Waives Attorney-Client And Work Product Privileges Through Advice Of Counsel Defense
A broadly worded defense in a case challenging the sale of a company resulted in a waiver of the attorney-client and work product privileges last week, in Richardson v. Frontier Spinning Mills, Inc.
Richardson claimed that the company had improperly structured its sale so that non-employee shareholders like him were paid less for their stock
I’m Back With An Update on Six Business Court Cases
i was gone (not fishin’) for the entire month of September. I haven’t written on this blog since August and nobody has noticed. Nobody has emailed me to ask where the heck I was or what I was doing or whether anything worth knowing had happened in the Business Court The lack of any outcry about my absence hurt my feelings, but I am back even so with this September update on cases in the Business Court decided during the missing September. They ran the gamut, from subpoenas to injunctions to how not to get an extension of time in the Business Court.
Standing to Object to Subpoenas to Non-Party Banks
In Deyton v. Estate of Kenneth C. Waters, Jr., 2011 NCBC 34, Judge Gale ruled that a party to a lawsuit lacked standing to object to a subpoena sent by the opposing party to a non-party bank. The Judge observed that "as a general proposition, parties to a lawsuit typically lack standing to challenge a subpoena issued to a third party."
Although there is an exception to that general rule if the objecting party has privilege in the documents requested, the moving party attempted to invoke, Judge Gale held there is not a privilege created in bank records by the Federal Right to Privacy Act of 1978 (12 U.S.C. §3402) or the North Carolina Financial Privacy Act (N.C. Gen. Stat. §53B-1, et seq.).
The rule might be different in federal court. Judge Gale stated in a footnote that an Eastern District of North Carolina court has said in United States v. Gordon, 247 F.R.D. 509, 510 (E.D.N.C. 2007) that "[a] small number of courts have held that a party’s claimed privilege with respect to his or her bank account records is sufficient to confer standing for purposes of challenging a subpoena."
In another case decided on the same day, Jones v. Sutherland, Judge Murphy, without the benefit of the Deyton discussion, considered an objection by a defendant to a subpoena to a non-party bank. He denied the motion to limit the subpoena even though it covered a nine-year "extensive time period," saying it was not "designed to be a fishing expedition."Continue Reading I’m Back With An Update on Six Business Court Cases
Fourth Circuit Authorizes Retaliation By Prospective Employers Against FLSA Claimants
in a significant employment law case, the Fourth Circuit ruled last Friday that an employer may decline employment to a prospective employees due to her having made FLSA charges against a previous employer. The case, decided 2-1 over a strong dissent from Judge King, is Dellinger v. Science Applications International Corp.
Dellinger had sued her then current employer for a Fair Labor Standards Act violation, and applied to the Plaintiff, Science, during the lawsuit proceedings for a new position. Science offered Dellinger a job, and requested that she inform it of any civil actions to which she was a party as a condition of her security clearance. Upon learning of the FLSA charges, Science withdrew its offer. Dellinger sued, alleging that Science had taken its action in retaliation to her FLSA charge.
Her case was dismissed by the district court, and the Fourth Circuit affirmed.
The FLSA prohibits retaliation "against any employee" who has sued to enforce the Act. The Act defines an "employee" as "any individual employed by an employer." Judge Niemeyer, after wading through other provisions of the FLSA, held that "Dellinger could only sue Science Applications if she could show that she was an employee and that Science Applications was her employer." According to the majority, no court has extended FLSA’s anti-retaliation protections to prospective employees.
Dellinger argued that a ruling against her would give prospective employers the license to discriminate against prospective employees for having made FLSA claims in the past. Judge Niemeyer said that he was "sympathetic" to this argument, but that:
The notion. . . that any person who once in the past sued an employer could then sue any prospective employer claiming that she was denied employment because of her past litigation would clearly broaden the scope of the FLSA beyond its explicit purpose of fixing minimum wages and maximum hours between employees and employers. We are, of course, not free to broaden the scope of a statute whose scope is defined in plain terms, even when "morally unacceptable retaliatory conduct" may be involved. Ball v. Memphis Bar-B-Q Co., 228 F.3d 360, 364 (4th Cir. 2000).
Op. at p.9.
The holding was "that the FLSA gives an employee the right to sue only his or her current or former employer and that a prospective employee cannot sue a prospective employer for retaliation."
Dentist’s Emails Satisfied Demand Requirement For Derivative Action
This week, Judge Jolly permitted a 50% shareholder to pursue derivative and individual claims against her co-shareholder. He found that the plaintiff had satisfied the demand requirement of G.S. sec. 55-7-42, and that she fit an exception to the general rule that a shareholder cannot pursue an individual cause of action for the diminution or
Business Court Denies Motion For Disqualification Of Counsel
Business Court Resolves Dispute Among Lawyers Over Division Of Class Action Fee Pie
Yesterday, Judge Gale entered summary judgment against a North Carolina lawyer who claimed he was entitled to a greater share of a $3 million fee award to a group of plaintiffs’ counsel in a series of settled class actions. The opinion was in the case brought by the lawyer seeking an enhancement of his fee
U.S. Supreme Court Turns Off “Stream Of Commerce” Jurisdiction At The Tap
Yesterday, the United States Supreme Court delivered two of its most significant opinions on the subject of personal jurisdiction in nearly twenty-five years (since Asahi Metal Ind. Co. v. Superior Court of California, 480 U.S. 102(1987)). The new cases are J. McIntyre Machinery, Ltd. v. Nicastro and Goodyear Dunlop Tires Operations, S.A. v. Brown. (linked
Fourth Circuit Triples Settlement Amount Because Of “Drafting Error” In Offer Of Judgment
If you are making an Offer of Judgment per Rule 68 of the Federal Rules of Civil Procedure, be sure to think about whether to include costs and attorneys’ fees in the amount offered. Yesterday, the Fourth Circuit underscored the need for "precise drafting" of such Offers,and required the offering party to pay triple