Over the past year, courts in the Carolinas expanded protections for doctors and other members of “learned professions,” continued pushing back against broad noncompete agreements, and made it harder for businesses to get a case dismissed in its early stages. Those are a few takeaways from Parker Poe’s annual review of the major trends and cases in North Carolina and South Carolina business litigation.
Parker Poe litigators across the Carolinas analyzed rulings and developments impacting class actions, unfair business practices, trade secrets, noncompete agreements, and general tactics in litigation. They are available to provide additional details in interviews, including on what these developments mean for businesses in North Carolina and South Carolina.
- Class action lawsuits continue rising in the Carolinas, and plaintiffs are getting more creative in how they pursue claims against businesses.
- The most common types of claims were related to data privacy, employment, and consumer fraud.
- The industries that are the biggest targets continue to include health care and banking, while tech, insurance, and telecommunications are on the rise.
- The federal appeals court over the Carolinas provided clarity on an important issue for businesses: whether certain contract language prevents them from moving a class action from state court to federal court.
Unfair Business Practices
- The N.C. Supreme Court broadly read an exception that protects doctors, lawyers, and other members of “learned professions.” A wider range of their business activity is likely now exempt from lawsuits under the Unfair and Deceptive Trade Practices Act (UDTPA).
- The N.C. Business Court opened a small door for an internal company dispute to count as “affecting commerce” under the UDTPA. Companies sued over an internal dispute may now have a harder time getting the case dismissed in its early stages.
Theft of Trade Secrets
- The N.C. Business Court clarified key areas of the law concerning the misappropriation of trade secrets, which are business practices and technical information that are valuable to companies in part because they are kept secret.
- The court refused to accept a trade secret definition that shifted over the course of litigation, making clear that plaintiffs do not have room to refine what counts as trade secret as a case develops.
- The court clarified the level of secrecy needed, ruling that mixing public information with secret information prevents all of it from meeting the definition.
- The court refined case law that entitles plaintiffs to an inference of misappropriation, ruling that reasonable inferences must be based on actual evidence, not speculation.
Noncompetes and Other Restrictive Covenants
- The N.C. Supreme Court and Business Court continued a trend of pushing back against broad noncompete agreements, non-solicitation agreements, and other types of restrictive covenants. Courts struck down entire agreements when one part was overbroad.
- The N.C. Business Court ruled that noncompetes and other restrictive covenants do not automatically remain in effect after a merger or acquisition. Companies can enforce them in relation to conduct that occurred before the acquisition, but they need a new agreement for conduct that occurs after, depending on the nature of the underlying corporate transaction.
- Disputes are becoming more routine as part of the formal “discovery” process in which both sides exchange information before a trial. Some parties are increasingly using discovery as a tool to wear down the other side and try to force a settlement.
- The S.C. Supreme Court ruled that plaintiffs should have a chance to amend their complaint before it is dismissed with prejudice in the early stages of a lawsuit. This will likely result in more cases going through at least one round of discovery, increasing costs for both sides.
- The S.C. Court of Appeals ruled that a company waives the cap on punitive damages if it does not mention that cap as part of its defense before the end of discovery.
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 225 lawyers in eight offices in North Carolina, South Carolina, Georgia, and Washington, D.C. The firm provides legal counsel to many of the largest companies and local governments in the Southeast.
Parker Poe is a member of two leading international legal networks: TerraLex and the Employment Law Alliance. TerraLex and the ELA have chosen Parker Poe to help guide clients through the challenges of global business.