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Getting into Business Court Part 1 of 2: Requirements for Complex Business Case Designation

This is the first article of a two-part series, the second of which will be published next week.

The North Carolina Business Court is seen throughout the state as a preferred venue for litigation involving complex business-related legal issues. The judges on the Business Court bench are highly specialized – former business litigation attorneys themselves – and particularly competent in deciding complex business disputes. However, not every claim involving business(es) can be designated for Business Court jurisdiction. N.C.G.S. § 7A-45.4 sets out the actions which may be designated as mandatory complex business cases within the Business Court’s jurisdiction:

  • Disputes involving the laws of corporations, partnerships, and LLCs;
  • Disputes involving securities;
  • Disputes involving antitrust law, except those arising solely under G.S. 75-1.1 (unfair and deceptive trade practices claims) and Article 2 of Chapter 75 (fair debt collection practices claims);
  • Disputes involving trademark law;
  • Disputes involving intellectual property ownership and transactions, including software, data security, pharmaceuticals, and biotechnology;
  • Disputes involving trade secrets; and
  • Contract disputes where each of the following factors are present:
    1. At least one plaintiff and at least one defendant is a corporation, partnership, or LLC authorized to do business in North Carolina;
    2. The complaint asserts a claim for breach of contract or a declaration of rights, status, or legal relations pursuant to a contract;
    3. The amount in controversy (the total value of the relief being sought) is at least one million dollars ($1,000,000); and
    4. All parties consent to the designation.

It also sets out actions which shall be designated as mandatory complex business cases:

  • An action involving a disputed tax case, or a constitutional challenge to a tax statute;
  • An action involving any of the issues listed above with an amount in controversy of at least five million dollars ($5,000,000); and
  • Actions involving pole attachments (not really sure why this provision is included, as most people will never encounter this issue, and the issue is not one which requires extensive business knowledge).

Procedural Requirements

Practically speaking, how does an action obtain complex business case designation? The party seeking designation must file a Notice of Designation, along with a $1,100 designation fee (in addition to the normal $200 Civil Superior Court filing fee), in the Superior Court in which the action is filed and contemporaneously serve the notice on opposing counsel, as well as the Chief Business Court Judge (currently Judge Gale, previously Judge Jolly) and the Chief Justice of the North Carolina Supreme Court (Chief Justice Martin) for approval of the designation. The Notice also requires a certification by the designating party that the action meets the criteria for designation as a mandatory complex business case.

Additionally, if an action is filed without designation, and that action meets the requirements for mandatory complex business case designation, the Superior Court, on its own order, can stay the action until it has been appropriately designated as such.

Dual Filings

Once an action is designated as a mandatory complex business case, the parties are required to file all pleadings and notifications which would normally be filed only with the Clerk of Superior Court, both electronically with the Business Court and via hard copy with the Clerk where the complaint was filed. Some parties make the mistake of only filing electronic copies, and the Business Court Judge is within his discretion to strike pleadings which are not filed with the Clerk, or which have missed a deadline by filing the Clerk’s hard copy too late.

Local Rules

The Business Court also has its own local rules, similar to those of the various counties in North Carolina. The Business Court rules supersede those of the county where the action is filed, while the case is within the Business Court’s jurisdiction. Adhering to these rules, like the filing rule mentioned above, is very important and the Business Court Judge is, again, within his discretion to strike pleadings which do not conform to the rules.

Next week’s article will highlight the reasons why the Business Court can be an attractive venue for complex business cases – are the added costs and procedural hurdles outweighed by the Business Court’s benefits?