Plaintiff designated its expert witness in an untimely way, without any good reason. Plaintiff furthermore had not seasonably supplemented an earlier discovery response seeking the identification of expert witnesses. The Court emphasized the duty of parties to comply with the Court’s scheduling orders, and stated "[p]ut bluntly, when it comes to matters of case management and scheduling, a party is not entitled to anything unless and until the court says so."

Defendant requested that the testimony of the expert be excluded at trial. The Court recognized the significance of the witness to plaintiff’s case, and noted the possibility that the plaintiff might dismiss and re-file if the expert was excluded.

It therefore declined to exclude the expert, and instead sanctioned the plaintiff by ordering him to pay the deposition costs of deposing the expert, and defendant’s fees incurred in making the motion. It furthermore gave defendant leave to identify rebuttal experts, and said that defendant should provide disclosure as to the opinions of those experts but that plaintiff would not be entitled to depose them.

The Court further indicated that it would consider a motion to continue by the defendants if they were unable to properly prepare to meet the testimony of plaintiff’s expert.

Full Opinion

The Court granted a Motion to Quash a subpoena to a non-party. The subpoena was served on the non-party at its corporate offices in Texas, and demanded production of the requested documents in North Carolina. The non-party had no presence in North Carolina, but was licensed by the North Carolina Department of Insurance to do business in North Carolina.

The Court held that although there might be personal jurisdiction in North Carolina over the non-party, the Court’s subpoena power was not co-extensive with its jurisdiction. It stated "the existence of personal jurisdiction over a non-party foreign corporation, standing alone, is insufficient to extend the Court’s subpoena power to that corporation for purposes of a deposition or the production of documents."

Although North Carolina’s insurance law provides that a foreign insurer may be served with "process," that term refers to a summons and complaint in an action against the insurer, not a subpoena.

Full Opinion

Plaintiff’s former employee was subject to restrictive covenants in an Amended Employment Agreement. He was also subject, however, to what he claimed were conflicting restrictions in a subsequently executed Stock Purchase Agreement. The former employee asserted that the claims under the Amended Employment Agreement should be dismissed.

The Court denied the Motion and struck the employee’s defense on this basis. It held that the restrictive covenants, although not consistent, could be enforced concurrently, and that there was not a novation or a substitution of the contract. Nor did the merger clause in the subsequent agreement eliminate the restrictions in the earlier agreement.

The Court also addressed plaintiff’s motion to disqualify defendant’s counsel, who had represented him in connection with the Stock Purchase Agreement. It denied the Motion, holding that plaintiff had to meet a high standard of proof to obtain disqualification. The issue was whether the prior representation was "substantially related" to the matter before the Court. The Court found that it was not, since plaintiff’s claims were lodged under the Amended Employment Agreement, not the Stock Purchase Agreement. The standard for whether a matter is substantially related to another is that there must be a "virtual congruence of issues."

Also, there was no risk that the law firm had obtained confidential information in its prior representation, which had occurred five years earlier, which would have materially advanced its new client’s interest in the litigation. The Court contrasted cases in which there was a high risk of the lawyer having access to such information.

Full Opinion

The Court denied Defendant’s Motion for a Protective Order seeking to delay the taking of the depositions of its representatives. It held that the defendants had unreasonably taken the position that they could not be available for depositions for nearly four months. It also rejected their argument that their primary counsel could not be available for their depositions given other commitments, noting that the law firms representing them had 650 lawyers between them, and that it was "confident that [the defendant] can find one or two other lawyers to defend the depositions."

Full Opinion

The issue here was whether the parties had reached an agreement by which defendant was to pay fees to plaintiff for managing an advertising program. Plaintiff alleged that the agreement was "non-cancellable" for a term of one year. The Court found that the correspondence relied upon by plaintiff did not establish a binding contract. Although the parties had agreed on the price to be paid for each advertisement, they had not agreed on the number of advertisements that would be posted by the plaintiff, or when or where they would be posted. Material terms had been left open for negotiation, hence there was no valid contract.

The Court also rejected the argument that the contract had been ratified It held that ratification occurs when the person making the contract purported to act for its principal. Plaintiff’s argument, however, was that the principal had ratified the contract, which the Court found to be the "legal equivalent of attempting to force a square peg into a round hole." The Court further ruled that an oral promise of a guarantee term to the contract was barred by a merger clause, pursuant to the parol evidence rule.

The Court found, however, that there were material issues of fact as to plaintiff’s unfair and deceptive trade practice claims. It ruled that the oral statements by the defendant as to the term of the contract, which it had no authority to make, might have been fraudulent and were certainly unethical, and the defendant had failed to do anything to correct them. The Court also found a factual question on whether the defendant which spoke the misleading statements was acting with the authority of another defendant. Whether the speaking defendant had the apparent authority to act on behalf of the other defendant was a question of fact.

Finally, the Court granted summary judgment on plaintiff’s claim for damages based on diminution in business value. Plaintiff’s remaining claim was essentially for fraud in the inducement, and the measure of damages for that claim is the difference between plaintiff’s expected profit if it had been permitted to perform for the full year, and the amount that it was actually paid before being terminated." Furthermore, the only reason for plaintiff to be in business was to perform under the contract at issue, making a diminuntion in value theory inapplicable and one of "unbounded speculation." The business was a new one, and had value only to the extent that the defendant chose to renew the contract. Although new businesses can recover for loss of profits, they must show them with reasonable certainty like an established business.

Full Opinion

Plaintiff, the former employer of the defendant insurance broker, sued to enforce his amended employment agreement. Defendant moved to dismiss, claiming that the agreement had been superceded by an exit agreement, that a later stock purchase agreement had served as a novation of the employment agreement, and finally that the non-competition provisions in the employment agreement were unenforceable.

The Court rejected the first argument, which was premised on the presence of a merger clause in the exit letter. The Court held that in order to determine the impact of the merger clause, it would have to make a fact intensive inquiry inappropriate on a motion to dismiss. On the novation argument, the Court found that the stock purchase agreement was not referenced in the pleadings and that it was inappropriate for it to consider that agreement on a motion to dismiss. The Court found, in any event, that whether a novation had occurred was a fact question.

The Court then discussed the general standards for the validity of non-competition agreement, and concluded that the plaintiff’s claims for violation of that agreement would survive. It held the term, which was potentially as long as four years because of a "look back" provision, was reasonable. It further found that a client-based restriction, in lieu of a specific territorial restriction, can be valid.

It held this restriction invalid, however, because it created a conclusive presumption that if any client of plaintiff did business with defendant’s new firm, even clients with whom defendant had not worked, that would be deemed to be a violation of the covenant. The Court blue penciled this provision of the restrictive covenant and let stand the claim on the remainder. (There was no claim before the Court for injunctive relief).

Full Opinion

The Court granted a Motion to Compel Arbitration of claims arising out of the Master Settlement Agreement between the major tobacco manufacturers and the states. The Court found the language of the arbitration clause, which contained the words "any dispute, controversy or claim arising out of or relating to" be very broad. The Court also noted North Carolina’s strong public policy in favor of arbitration, and that the agreement to arbitration had helped to eliminate "any real or imagined home court advantage" and would avoid "the potential influence of state politics and other matters." 22 other states had granted similar motions.

Full Opinion

Defendant, who was a director, shareholder and former employee of the corporate plaintiff, moved to disqualify the corporate plaintiff’s counsel. He argued that he reasonably believed that the law firm had represented him with regard to the agreements at issue and a guaranty agreement. He also argued that disqualification was appropriate because the corporation’s lawyers had "responsibilities" to him as a shareholder and director of the company.

The Court denied the motion. It found that although the law firm had represented defendant with regard to the guaranty agreement, the former representation was not substantially related to the claims before the Court so as to warrant disqualification under Rule 1.9 of the Rules of Professional Conduct. The Court also found that the law firm had not obtained any information in the course of that representation that would advance its defense of the corporation in the case before it.

Considering multiple factors, it determined that defendant could not have reasonably believed that the law firm was representing him in his individual capacity. On the argument regarding "responsibilities," the Court held that a corporation can be represented by its regular corporate counsel when the corporation is adverse to one of its constituents.

The Court dismissed the defendant’s counterclaim that the Stockholders Agreement requiring him to tender his shares back to the corporation was unconscionable, finding that the claim failed under either North Carolina or Delaware law.

Before reaching this issue, the Court expressed doubt about whether the choice of law provision specifying North Carolina law in the Agreement was enforceable, given that the corporation was a Delaware corporation and in consideration of the internal affairs doctrine.

The Court expressly refused to apply North Carolina law to plaintiff’s claim for dissolution, "because a claim for judicial dissolution goes to the very core of a corporation’s internal affairs [so] it is properly governed by the law of the state of incorporation." If North Carolina law had been applicable, however, the Court held that dissolution would not be appropriate.

Defendant’s claim that he had reasonable expectations of continued employment was belied by the terms of his employment agreement, which provided for termination at any time after twelve months, without cause.

Full Opinion

Plaintiff sued a departed employee, alleging that she had violated her confidentiality agreement and her non-competition agreement. The Court found defendant’s new employer had not tortiously interfered with her contract. It found the provision on which plaintiff relied, restricting its employees from providing services to any of its clients for 180 days following the termination of employment, to be invalid, because it attempted to restrict defendant from providing services to any client of her former employer, even those with whom she had no contact during her employment.

The Court found the non-compete to be invalid for other reasons as well. It found the three-year restriction on employment to be overly long. It found the geographic restriction — which extended to the entire state of North Carolina — to be overly broad, as defendant had only worked in four counties. It also found the covenant, which purported to prevent the defendant from competing "directly or indirectly, individually or as an employee, partner, officer, director or stockholder or in any other capacity whatsoever of any person, firm, partnership or corporation" to be unnecessarily restrictive.

Also, given that individual defendant was in the business of providing medical care to patients, the Court found that there were policy issues counselling against the enforcement of the covenant.

The Court did allow the plaintiff to proceed on a claim for unfair and deceptive practices against defendant’s new employer. It found that defendant had copied some of plaintiff’s human resources documents without its knowledge or consent. It held that even though defendant had not obtained a competitive advantage as a result, the misuse was an unfair and deceptive practice.

The defendants had counterclaimed. On their claim for defamation, the Court found that plaintiffs were not entitled to an absolute privilege simply because some of the allegedly defamatory statements had been made to governmental agencies. The Court found that the absolute privilege applied only to agencies exercising a judicial or quasi-judicial function. Although plaintiff might have been entitled to a qualified privilege, the Court found that there was an issue of fact whether the statements had been made with actual malice.

The Court also found there to be questions of fact with regard to defendants’ counterclaim for tortious interference with prospective economic advantage.

Full Opinion

Brief in Support of Plaintiff’s Motion for Summary Judgment

Brief in Opposition to Plaintiff’s Motion for Summary Judgment

Reply Brief in Support of Plaintiff’s Motion for Summary Judgment

Brief in Support of Defendant’s Motion for Summary Judgment

Brief in Opposition to Defendant’s Motion for Summary Judgment

Reply Brief in Support of Defendant’s Motion for Summary Judgment

The Court denied plaintiffs’ Motion to Amend to add a claim for violation of the North Carolina RICO Claim, finding that it would be futile. The statute requires that a plaintiff allege "at least one act of racketeering activity other than (i) an act indictable under 18 U.S.C. § 1341 or U.S.C. § 1343 [prohibiting wire and mail fraud], or (ii) an act which is an offense involving fraud in the sale of securities." The Court found that it was not bound by cases construing the federal RICO Act, as the state statute was different, and applied general principles of statutory construction. It focused on the intent of the Legislature, and found that the purpose of the statue was to "provide compensation to private persons injured by unlawful activity," but not to allow recovery for wrongful acts which were also wire fraud, mail fraud, or fraud in teh sale of securities. All of the wrongful acts alleged by plaintiffs, the court found, were designed to get them to engage in the purchase or sale of securities. Therefore, plaintiffs were not entitled to make a state RICO claim.

Full Opinion