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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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Bueche v. Noel, April 17, 2008 (Diaz)(unpublished)

How extensively can a deponent change her deposition testimony during her post-deposition review of the transcript?  Pretty extensively, it turns out, according to an opinion yesterday from the Business Court.

In Bueche v. Noel, a non-party deponent made fifteen pages of changes and additions to her deposition testimony on errata sheets. The defendant moved to strike the changed and added testimony. Among other things, the defendant argued in its brief that the deponent had used the deposition as a "take home exam" to write answers on which its counsel had no opportunity to cross-examine her.  (Links to the briefs are at the bottom of this post)

The federal courts are split on the scope of a deponent’s right to correct or add to her deposition answers, as demonstrated by the parties’ briefs.  There was no North Carolina appellate court precedent on the issue.

The Court looked to Rule 30(e) of the North Carolina Rules of Civil Procedure, which authorizes changes "in form or substance" to the deposition testimony, so long as the deponent signs "a statement reciting such changes and the reasons given . . . for making them."  The Court held that a deponent has the freedom to make any type of correction, whether as to form or substance, so the changes and additions were allowed. 

The new testimony didn’t replace the previous testimony, however.  The Court held that the original answers would remain part of the record and could be used for impeachment or any other relevant purpose.  The Court also permitted the defendant to reopen the deposition on the limited subjects of the corrections made on the errata sheet, the reasons for those changes, and any reasonable follow-up questions.

The Court also ruled on another first impression issue of North Carolina deposition procedure:Continue Reading Deponent Can Materially Change Deposition Testimony During The Reading And Signing Process

Voyager Pharmaceutical Corp. v. Bowen, April 15, 2008 (Jolly)(unpublished)

Voyager, a company engaged in pharmaceutical research directed at slowing or halting Alzheimer’s disease, was attempting a $100 million public offering in 2005.  It alleged in its Complaint that it was unable to complete the IPO due to the actions of one of its directors, Bowen, and one of its employees, Atwood.  It made a variety of claims, including claims for breach of fiduciary duty.

The allegations as to what Bowen had done are pretty interesting.  Here’s how the Court characterized some of them:

While Voyager’s management was in the 4:30 p.m. conference with Hambrecht, Bowen was in a hospitality suite in the Marriott Marquis Hotel that had been set up to accommodate Voyager’s shareholders. (Compl. ¶ 66.)  There, Bowen told one or more shareholders that the IPO was not going to proceed because "God had told him so," and because Voyager had refused to add "the glorification of God" to its mission statement.  (Compl. ¶ 66.)  Bowen also told the shareholders present that day that any further attempts to complete the IPO would fail until his demands were met, including giving credit to God in Voyager’s mission statement.  (Compl. ¶ 66.)  Bowen also asked one of the shareholders whether he would be willing to serve as a director of Voyager "when I regain control of the Company."  (Compl ¶ 66.)  Bowen also falsely told one or more shareholders that there was a problem with the Phase I data that had not been resolved and also falsely stated that when he raised this issue with management, management had locked him out of his office.  (Compl. ¶ 68.)

The Court first confronted the issue of choice of law on Voyager’s claims for breach of fiduciary duty. The Court noted that there was little guidance in North Carolina as to the proper application of the internal affairs doctrine.  It determined that it would apply the law of Delaware, the state of Voyager’s incorporation, to those claims.

It then rejected Bowen’s argument that his actions were protected by the business judgment rule.  It held:

Continue Reading Fiduciary Duty Claims Can Proceed Against Director And Employee Who Allegedly Sank $100 Million IPO

A panel of the Court of Appeals split today on the legal standard for when a corporate officer can be subject to personal jurisdiction based on contacts created through his or her capacity as an officer.

In Saft America, Inc. v. Plainview Batteries, Inc., the Court reversed the trial court’s determination that there was jurisdiction over the defendant’s president, who had conceded visiting plaintiff’s factory in North Carolina.  The Court held that "personal jurisdiction over an individual officer or employee of a corporation may not be predicated merely upon the corporate contacts with the forum."  The majority ruled that all of the president’s actions were in his official capacity as a corporate officer, not in his individual capacity, and reversed the trial court’s finding of jurisdiction. 

Judge Arrowood dissented, so this issue may be headed for clarification by the North Carolina Supreme Court.  Here is the key quote from the dissent:

Continue Reading Court Of Appeals Splits On Personal Jurisdiction Over Corporate Officer

The North Carolina Legislature created clear categories of mandatory jurisdiction when it expanded the jurisdiction of the Business Court in 2006 (see this post). 

The statute provides that a party can oppose a designation to the Court, but those challenges are rarely successful, as demonstrated by the cases at the end of this post.  But this month, the Court threw out two cases that met the requirements for its mandatory jurisdiction. 

In the first case, Goldstein v. Countrywide Homes, Inc. decided on April 1, 2008, the Court ejected a securities fraud case, smack within the scope of its mandatory jurisdiction. The reason the Court gave was that there were already two cases pending in Wake County making similar claims. One of those cases had already received a Rule 2.1 designation as an exceptional case. The Court found that it would be more efficient if discovery in the cases was coordinated, and that inconsistent rulings would be avoided, and recommended that the case receive a 2.1 designation.

In the second case, Ikerd v. Greenwood, decided on April 8, 2008, the Defendant failed to file its Notice of Designation to the Business Court within the thirty days of its receipt of either the Complaint or the Amended Complaint, as required by N.C. Gen. Stat. §7A-45.4.  The Court denied designation of the case as a mandatory complex business case due to the untimely filing, noting that the case could still be designated as a 2.1 case.

It is far more often that the Court overrules an objection to a mandatory designation, like in these cases, all of which are unpublished decisions denying a party’s objection:Continue Reading Business Court Throws Out Cases Subject To Its Mandatory Jurisdiction