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Wednesday, August 27, 2008, 2:36 PM


In Shaw v. U.S. Airways, Inc., the NC SCT overruled the NC COA, holding that employer contributions are not to be included in "average weekly wage" in determining workers' compensation benefits.

Shaw, an airline worker, hurt his back lifting luggage. The parties didn't dispute Shaw's entitlement to workers' compensation -- they did, though, disagree about whether the airline's contributions to Shaw's 401(k) and pension were part of Shaw's weekly wage from which the level of Shaw's workers' comp. benefits were computed.

A divided NC COA panel (with Judges Geer and Elmore in the majority and Judge Hunter dissenting) held that not all fringe benefits should be excluded from calculating "average weekly wage" and remanded to the Industrial Commission for reconsideration.

A split NC SCT reversed. Justice Newby, writing for the majority, determined that contributions to retirement accounts, "fringe benefits," are not part of an employee's "earnings," a term used to define "average weekly wage" in the Workers' Compensation Act. Holding otherwise would graft onto workers' comp. law something otherwise not there -- which only legislature can do.

Justices Timmons-Goodson and Hudson dissented. Not least because prior case law indicates that pensions are deferred compensation, and because the Workers' Compensation Act is to be construed broadly, they would have affirmed the COA majority.

SCT Petitions and Perhaps Opinions

The NC SCT is scheduled to release decisions on petitions today - and perhaps some opinions will come out with them.

Tuesday, August 19, 2008, 2:14 PM

COA Opinions Today

The Court of Appeals released 22 published opinions today, 17 in civil cases, and 6 with dissents.

Tuesday, August 05, 2008, 2:13 PM

COA Reverses Order Compelling Accounting Firm To Produce Records To DOR

Today the Court of Appeals (COA) ruled against the Department of Revenue (DOR), reversing a trial court order that compelled Ernst & Young (E&Y) to produce records relating to services it provided to Wal-Mart over a number of years. The COA remanded for in camera review, even though Wal-Mart hadn't requested it in the trial court. The case is In re Matter of the Summons Issued to Ernst & Young, LLP.

E&Y provided services to Wal-Mart for tax shelters and REITs designed to reduce state income taxes. E&Y also analyzed litigation risks when Wal-Mart restructured its operations.

DOR issued a summons (under G.S. ยง 105-258) directing E&Y to produce information regarding Wal-Mart and its subsidiaries, including all documents "regarding the creation or existence of" affiliated entities; all documents created from 1990-2000 discussing REITs, regulated investment companies, trusts, and/or holding companies owning trusts; and all documents created from 1990-2005 "proposing or analyzing transactions that require the creation, elimination, and/or restructuring of entities within the Wal Mart corporate structure and that would produce ... tax savings."

E&Y produced a plethora of documents but withheld 760 documents. Invoking the work product doctrine, Wal-Mart produced a privilege log describing the documents as "legal analysis" or "tax opinion." The trial court rejected Wal-Mart's claim of work product immunity and ordered E&Y to produce the documents. Wal-Mart appealed.

DOR argued that Wal-Mart failed to show that the withheld documents were protected by the work product doctrine. DOR also argued that the privilege log wasn't sufficient, because it didn't describe on a document-by-document basis how each document related to litigation. The COA, however, remanded for in camera review, because it was unable determine from the record whether the withheld materials were created in anticipation of litigation. The COA remanded even though Wal-Mart hadn't submitted the documents for in camera review or requested a review of them by the trial court. The COA observed that Wal-Mart "offered specific reasons why the documents are protected, submitted a privilege log, and submitted an affidavit supporting its reasons for asserting privilege," and the COA said that many of the documents described on the log "appear to be correspondence and legal analysis from a large law firm, Davis Polk & Wardwell."

COA Reminds: Don't Wait For Costs/Fees To Be Resolved Before Appealing Judgment

Today the Court of Appeals (COA) dismissed an appeal for lack of jurisdiction because the appellant filed the notice of appeal too late. The case is In re Will of Fannie J. Harts.

This was a caveat proceeding. The caveator lost. The trial court entered judgment on May 21, 2007, but didn't address at that time the motion for costs and attorneys' fees. Rather than filing a notice of appeal within 30 days after the judgment, the caveator decided to wait until the motion was resolved. It was resolved two months later, by order entered July 24, 2007, awarding costs and fees.

Seventeen days later the caveator filed a notice of appeal--both for the July 24, 2007 order on fees/costs and for the underlying May 21, 2007 judgment. The COA held that it had no jurisdiction to review the underlying judgment, because the appeal wasn't timely filed, i.e., wasn't filed within 30 days after the May 21st judgment: "when the judgment was entered before the issues of costs and attorney's fees had been settled, the only course of action was for caveator to appeal the 21 May 2007 judgment."

In most situations, if the notice of appeal is filed before the trial court has addressed costs/fees, the trial court must wait until the case has been remanded from the appellate court to address costs/fees. This is because (absent special circumstances) the filing of the appeal divests the trial court of jurisdiction over the matter. McClure v. County of Jackson, 648 S.E.2d 546 (2007).) As the COA reminded trial courts today, quoting McClure, "'the better practice is for the trial court to defer entry of the written judgment until after a ruling is made on the issue of attorney's fees, and incorporate all of its rulings into a single, written judgment.' This course of action will serve to eliminate a host of jurisdictional traps and black holes at both the trial and appellate levels."

COA Upholds Two Rule 11 Sanctions

Today the Court of Appeals upheld Rule 11 sanctions in two cases (see here and here).

Split COA Upholds UDTPA Judgment Based On Interruption/Disconnection of Electricity

Today the Court of Appeals (COA) upheld a treble-damages judgment for an unfair trade practice under G.S. 75-1.1, based on a campground operator's interruption and disconnection of electrical service. The case is Shepard v. Bonita Vista Properties, L.P. Judge Stephens wrote the majority opinion, joined by Judge McGee. Judge Tyson dissented.

Defendant operated a campground. It rented spaces on which recreational vehicle (RV) operators could park and live in their RVs. The RV spaces were available to monthly tenants. The campground also furnished and charged for electrical service to RV operators requiring such service. Plaintiffs lived at campground in their RVs, paying monthly rent to and purchasing electricity from Defendant. Defendant interrupted and eventually disconnected Plaintiffs' electrical service, damaging their RVs. The COA majority held that "Defendants' acts in interfering with and disconnecting Plaintiffs' electricity were . . . unfair," entitling Plaintiff to treble damages as a matter of law under Chapter 75.

COA Decisions Today

The Court of Appeals released 44 published opinions today, of which 20 are criminal and 24 are civil (one-third of which are domestic or juvenile cases). More on these cases later.
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