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Mack Sperling

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I’m a business litigator in North Carolina, with Brooks Pierce McLendon Humphrey & Leonard, LLP.

I grew up in New York, went to college there (at Union College in Schenectady), and then came to North Carolina to law school at UNC-Chapel Hill. I clerked for United States District Judge Frank Bullock of the U.S. District Court for the Middle District of North Carolina after graduating, and then joined Brooks Pierce.

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It’s hard to get an injunction enforcing a covenant not to compete that has a nationwide territory, but the Plaintiff was successful at that in the Middle District’s decision last week in Philips Electronics North America Corp. v. Hope.  The injunction was also based on the North Carolina Trade Secrets Protection Act.

This was a thorough 44 page opinion addressing a number of non-compete and trade secrets issues, so this is a long post.  You’ll have to read to near the end to see why the post gets a picture of, of all things, a sausage?

Background

Hope was the Executive Vice President of Sales for DLO, responsible for the company’s sales of iPod accessories throughout the United States and Canada.  Hope had substantial interaction in that position with a $75 million customer, Best Buy, and other major DLO customers.

In December 2006, Hope signed a Letter Agreement containing a broad covenant not to compete.  It prevented him from working in the same or similar position for a DLO competitor anywhere that DLO conducted business, potentially throughout the entire world, for a two year period.

The stock of DLO was purchased by Phillips Electronics six months later.  Phillips operated DLO as a separate entity until January 2009, when DLO was merged into Phillips.  (This created an interesting standing issue regarding the right of a corporate acquirer to enforce a non-compete, discussed below under the heading "Standing").

In 2008, while still employed by DLO, Hope began planning to compete with the company.  He contacted others at DLO about the possibility;  began discussions with a manufacturer about making competing products; and used confidential DLO materials in his efforts, including DLO’s business plan and internal financial information.

Hope resigned from DLO months later, the day after his new company obtained financing.  He misled his old employer about his intentions, saying he was going to work with his father.  The new company immediately began selling to some of DLO’s customers, including Best Buy.  Several months later, DLO discovered Hope’s involvement with the new competitor.Continue Reading Nationwide Covenant Not To Compete Enforced By North Carolina Federal Court

The North Carolina courts are taking some serious strides towards the implementation of electronic filing in Superior Court.  The State has gone live with pilot e-filing programs in Chowan and Davidson Counties.  Wake County will be added shortly as a third pilot county.  The goal is full and mandatory implementation throughout the State within two…

An accountant who had prepared financial statements did not need to be designated as an expert witness in order to provide testimony regarding those financial statements, per the Business Court’s ruling in A-1 Pavement Marking, LLC v. APMI Corporation, 2009 NCBC 15 (N.C. Super. Ct. June 26, 2009).  The opinion also discusses generally accepted accounting principles ("GAAP") relevant to financial statements of consolidated entities.

The issue in A-1 was Plaintiff’s calculation of a bonus due one of the Defendants, which was to be based on Plaintiff’s gross profits. The Plaintiff’s consolidated financial statements had eliminated a significant receivable due from a subsidiary. The Defendant asserted that his bonus would have been substantially higher with the inclusion of that receivable in the gross profit calculation, and brought a claim under the North Carolina Wage and Hour Act.

The Plaintiff moved for summary judgment, relying on an affidavit from the accountant who had prepared the financial statements on which the calculation was based.  The Defendant objected to what it termed "improper opinion testimony," and argued that the accountant had never been designated as an expert witness.

Judge Diaz rejected the argument that the accountant was an undisclosed expert who shouldn’t be allowed to testify, holding:  Continue Reading Accountant Who Prepared Financial Statements Didn’t Need To Be Designated As An Expert Witness In Order To Testify

The Court denied a motion for "alternative service of process" on a foreign defendant, ruling that the Plaintiff had not shown it had exhausted the traditional means of service available under Rule 4(j3) by attempting service through the means specified in the Hague Convention.

The Court further stated that if Plaintiff could not with due…