North Carolina Business Litigation Report

North Carolina Supreme Court Rulings Today

There were three North Carolina Supreme Court decisions today which are worth a mention, involving personal jurisdiction, depositions, and the North Carolina Whistleblower Act:

In the personal jurisdiction case, the Court reversed the Court of Appeals in an alienation of affections case, Brown v. Ellis.  The Court ruled that there was jurisdiction over the out-of-state defendant in North Carolina even though the defendant had "never set foot in the State of North Carolina."  The Supreme Court based jurisdiction on defendant's daily phone calls and emails to the plaintiff's wife.  The Supreme Court didn't accept defendant's protestations that these extensive communications were "the normal pleasantries associated with a friendly working relationship."

The deposition case, Rodriguez-Carias v. Nelson's Auto Salvage & Towing Service, Inc., resulted in an unfortunate 3-3 split.  Rodriguez-Carias involved the practical issue whether the court reporter for a telephone deposition needs to be in the physical presence of the deponent.  The Court of Appeals decision ruled that it was sufficient for the court reporter to be in the "vocal and aural presence" of the deponent, not his or her physical presence.  The effect of a 3-3 decision is that the Court of Appeals ruling stands, but without precedential effect.  The fact that there were three members of the Court willing to reverse this decision makes it risky to take depositions without having the court reporter at the other end of the phone line, with the deponent.

The Whistleblower decision, Helm v. Appalachian State University, reversed the Court of Appeals. Plaintiff was a Vice Chancellor at Appalachian who claimed she was fired for objecting to the issuance of a $10,000 check from the University Endowment to obtain an option to buy property for $475,000.  Plaintiff complained that there weren't funds available in her budget to exercise the option and she had blown the whistle about a "misappropriation of funds." The Court of Appeals majority affirmed the dismissal of her case, saying that the option had an "inherent, intrinsic value," and thus there had been no misappropriation to report.  The Supreme Court adopted Judge Calabria's dissent in the Court of Appeals, in which she said "while the enforceable right to purchase does have theoretical value, its value under the facts as alleged by the plaintiff does not justify the expenditure of $10,000 from the public funds."

You can find the rest of today's decisions from the Supreme Court here.

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Mack Sperling
Brooks Pierce, LLP
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