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Overview of Major Developments in N.C. & S.C. Business Litigation

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  • March 07, 2019

Class action lawsuits are increasing in the Carolinas, businesses now face an exacting standard to protect their trade secrets, and courts may begin cracking down on what one judge called “a regrettable trend” in business litigation. Those are a few takeaways from Parker Poe’s review of the major trends and cases in North Carolina and South Carolina business litigation over the past year.

Parker Poe litigators across the Carolinas analyzed rulings and developments impacting class actions, trade secrets, noncompete agreements, business theory, arbitration, discovery, and legal ethics. Below are highlights of their year-in-review. They are available to provide additional details in interviews, including on what these developments mean for businesses in North Carolina and South Carolina.

Class Actions

  • Class action lawsuits and companies’ legal fees associated with them are increasing in the Carolinas and nationally.
  • Industries most impacted are health care, banking, consumer goods, chemical, and food products. 
  • N.C. legislature has taken steps to address the uptick at state level.  

Trade Secrets & Practices

  • N.C. Supreme Court formally adopted an exacting standard for pleading trade secret claims in Karwiec v. Manly.
  • S.C. Supreme Court held in Hartsock v. Goodyear that businesses can refuse to produce evidence of their trade secrets as long as they pass a two-part test.
  • N.C. Business Court judge called routine inclusion of Unfair and Deceptive Trade Practices Act claims “a regrettable trend in North Carolina business litigation,” warned that sanctions could be imposed in future cases. 

Noncompete Agreements

  • Noncompete agreements continue to be a significant source of litigation in the Carolinas.
  • S.C. Supreme Court set a standard in Palmetto Mortuary Transport v. Knight Systems that makes it easier to enforce a noncompete between businesses than between a business and its employees.

Business Theory

  • S.C. Supreme Court adopted the single business enterprise theory in Pertuis v. Front Roe Restaurants, but it recognized the difficult standard for litigants to successfully blur distinct corporate entities into a single business enterprise.
  • S.C. Supreme Court reduced fear among businesses tied to the court of appeals ruling in Nationwide v. Eagle Window & Door, which held a bankruptcy purchaser of a company’s assets may be liable for the predecessor company’s debts and obligations merely because the successor company retained the same officers. 

Arbitration

  • N.C. Court of Appeals emphasized in AVR Davis Raleigh v. Triangle Construction Company that ambiguities in an arbitration clause should be resolved in favor of arbitration.
  • N.C. Business Court showed in Charlotte Student Housing DST v. Choate Construction that, while an arbitration clause could be enforced against a business that did not sign the original arbitration agreement, there still may be differences in how the clause is enforced against that business.

Discovery

  • N.C. Business Court ruled in Tumlin v. Tuggle Duggins that the duty to preserve evidence begins when “a party is aware of circumstances that are likely to give rise to future litigation.”

Legal Ethics

  • N.C. Business Court ruled in Technetics Group Daytona. v. N2 Biomedical that attorney-client privilege did not apply to communications between a company’s patent counsel and an IT consultant.
  • The S.C. Bar put out an ethics advisory opinion that said an attorney copying a client on an email does not, without more, constitute implied consent for opposing counsel to send a “reply all” response.

To set up interviews on any of these developments and learn more about recent trends in business litigation, please contact us.

About Parker Poe
Parker Poe Adams & Bernstein LLP has more than 200 lawyers in seven offices located in major markets across North Carolina, South Carolina, and Georgia. The firm provides legal counsel to many of the largest companies and local governments in the region.

Parker Poe is a member of TerraLex, which was named the Global Network of the Year at The Lawyer's annual European Awards in 2018. With 155 member law firms and more than 17,000 attorneys in 100 countries, TerraLex members provide the legal resources clients need to conduct seamless business worldwide.