COA Opinions

The North Carolina Court of Appeals issued 11 opinions this morning. At first glance it does not appear that any of the opinions are related to the focus of this blog, but if, upon further review, we find something interesting, we will let you know.

H-P Sues Former CEO on Inevitable Disclosure Premise

We've been on vacation and, of course, the wires have been buzzing with news of H-P suing its former CEO, Mark Hurd, upon learning of his future employment with Oracle. We don't need to go into the details - this is the inevitable disclosure doctrine at work. You'll recall that covenants not to compete in California are virtually worthless in the employer-employee setting, with a specific statute that declares them illegal restraints on employee mobility.

We'll keep an eye on this case for you and report back once we know what legal angle H-P will push.

COA: No Minimum Contacts Where Defendant's Only Contacts Were Attempts to Resolve the Matter

Yesterday the COA held that, due in part to NC's public policy favoring settlement, minimum contacts have not been established where Plaintiff's first and only contacts with the State were attempts to resolve the case before a Conplaint was filed. The case is Smith Architectural Metals v. American Railing Systems.

Smith Architectural Metals contracted with American Railing Systems, a Pennsylvania company, to supply it with railing materials. American Railing then subcontracted with First Line, also a Pennsylvania corporation, to apply a “powder coating” to the railings. First Line then returned the railings to American Railing who then shipped the finished product to Smith Metals in North Carolina. Within three months the railing coating flaked and fell off.

The COA held that trial court did not have jurisdiction over First Line because it did not have sufficient minimum contacts with North Carolina. After it found out about the flaking railing coating, First Line sent emails, faxes, and checks to reimburse Smith Metals for the coating, before the Complaint in this matter was filed. These attempts to fix the situation were its first contacts it had with North Carolina. None of these activities indicate that First Line purposefully availed itself of the “benefits and protections” of the laws of North Carolina sufficient to establish personal jurisdiction over it. In fact, the COA noted,First Line’s sole purpose for these contacts was to attempt to resolve the problem without resort to litigation, and it would “offend traditional notions of fair play and substantial justice" to penalize First Line for doing so.

The COA reached this conclusion in part based on NC's public policy of encouraging settlement, and it concluded that there are no "meaningful distinction between offers to correct a problem pursuant to cooperative negotiations before the filing of a complaint and offers to settle once a lawsuit has begun."

COA Opinions

The Court of Appeals returned from the Labor Day holiday with 27 opinions for us. We will have more on these opinions later.

13 Candidates for Wynn Seat

As readers of this blog know, Judge Jim Wynn was recently confirmed to the Fourth Circuit Court of Appeals. Judge Wynn's confirmation to the Fourth Circuit created an opening on the North Carolina Court of Appeals. Because this opening occurred more than 60 days before the date of the general election, the North Carolina Constitution requires that the Wynn Seat be placed on the ballot for the November election.

The filing period to run for the Wynn Seat closed yesterday, August 31, 2010. Thirteen candidates have thrown their hat in the ring for Judge Wynn's former seat. The complete list of candidates is available here. The candidates include Judge Cressie Thigpen who was appointed to the Wynn Seat by Governor Perdue on August 23, 2010. Judge Thigpen's appointment runs until the end of the year at which time the winner of the race for the Wynn Seat will replace Judge Thigpen (unless, of course, Judge Thigpen wins the election).

On election day, North Carolina's voters will use an "instant runoff" method to elect Judge Wynn's successor. Voters will be required to rank their top three candidates. If any one candidate receives more than 50% of the first place votes, that candidate wins the election. If no candidate receives the necessary number of first place votes, the two candidates with the greatest number of first place votes advance to the "instant runoff." In the instant runoff round, each ballot counts as a vote for whichever of the two final candidates is ranked highest by the voter. The candidate with the most votes in the second round wins the election.

With the addition of the Wynn Seat to the ballot, 5 of the 15 seats on the Court of Appeals are up for election. The outcome of these races could have a drastic outcome on the composition of the Court for years to come.