Out Of State Counsel, Depositions, And Pro Hac Vice Admissions In North Carolina

I had an out of state lawyer call me, concerned, a few weeks ago. He was defending a client in his home state in a case in which the plaintiff's counsel had obtained commissions to take depositions in North Carolina. The depositions were scheduled to begin in just a few days, and he was concerned that he needed to admitted pro hac vice, in a hurry.

My reaction was that this was unnecessary. It was an out of state case. Rule 5.5(c)(2)(B) of North Carolina's Revised Rules of Professional Practice says that it's not the unauthorized practice of law to take a deposition in North Carolina if the "matter . . .  arises out of or is otherwise reasonably related to the lawyer's representation of a client in a jurisdiction in which the lawyer is admitted to practice." Moreover, it was the other side that had gotten the necessary commission and subpoena to take the deposition. The lawyer who called just planned on attending and possibly asking some questions after the other lawyer finished with his questions.

But after I looked at the situation a little bit I wasn't so sure. One of the North Carolina depositions was to be taken in Wake County, where there is a specific Local Rule on point. Wake County Local Rule 13.1 says that "out-of-state attorneys seeking to take depositions of Wake County residents to be used in actions pending in other jurisdictions must be admitted pro hac vice unless local counsel has been associated."

That's pretty broad. It might even cover an out of state lawyer taking the deposition of someone who agreed to appear voluntarily, without a subpoena. And are you "seeking to take depositions" if you are not the lawyer who compels the appearance of the witness, but you simply show up and ask some questions? And what about "unless local counsel has been associated?" Does that mean that NC counsel has to take the deposition or at least attend it, or is it enough if NC counsel simply obtains the issuance of the commission?

Given all these questions, we went ahead and got the lawyer admitted out of an abundance of caution.

I did a quick spot check of Local Rules for similar provisions. The only other county I'm aware of with an applicable rule is Mecklenburg County. The local rule there, 18.2(f),says "[i]f the out-of-state attorney intends to make an appearance in North Carolina in connection with this matter (such as attending the deposition)," the lawyer must be admitted pro hac.

There are occasional quirky local requirements of a different nature regarding pro hac admissions, like including a statement in the motion confirming payment of the $225 admission fee, which Guilford County Local Rule 5.12 requires. (All of the local rules for North Carolina's counties are available here, it's worth checking the pertinent rules if you are seeking or considering a pro hac admission).

Don't forget that when a lawyer is admitted pro hac here, the NC attorney responsible for the admission has to obtain a completed Pro Hac Vice Registration Statement, and file that with the state bar within thirty days of the admission. Failure to do so is grounds for administrative suspension of the NC attorney from the practice of law.  27 NCAC Subchapter H, Section .0101(b).

The North Carolina Bar has has an FAQ page on pro hac admissions which has a lot of useful information. The statute governing pro hac admissions is N.C. Gen. Stat. §84-4.1.

Take A Look At The New Raleigh Business Court

Here are a few pictures of the new North Carolina Business Court in Raleigh, thanks to Judge Jolly and his staff giving me a quick tour yesterday. The Court moved to the Campbell Law School's new Raleigh building on October 1st.

You'll see that there is a broad stretch of windows behind the Judge's bench, which look out on Hillsborough Street. Most new courtrooms don't seem to have windows. In addition to letting in some natural light, these will prove useful for daydreaming during tedious trial moments.

Also, there are two colorful, modern paintings of downtown Raleigh in the courtroom. Those aren't your typical courtroom art of former judges holding law books.

Beyond that, the courtroom has all the technological bells and whistles of the Business Courts in Raleigh and Charlotte.

[If you can't see the slideshow, try this link: http://www.flickr.com/photos/43856857@N05/sets/72157622518330473/show/


Created with Admarket's flickrSLiDR.

Judge Diaz Under Consideration For Fourth Circuit Court Of Appeals

Judge Albert Diaz of the North Carolina Business Court may be nominated by President Obama to the Fourth Circuit Court of Appeals, according to the Charlotte Observer.

And speaking of Judge Diaz, here's an interview of him that I hadn't seen before. The part about the pink hippopotamus is especially interesting.

North Carolina Court Of Appeals Rules That Electronic Signature Satisfied The Statute Of Frauds

Digital signatures and medieval law met today in the North Carolina Court of Appeals decision in Powell v. City of Newton, and the twenty-first century emerged the winner.

The Court enforced a settlement agreement involving a conveyance of land, even though no agreement reflecting the transaction had been signed as required by the Statute of Frauds. It relied, in part, on emails between counsel reflecting the settlement and circulating the necessary deed. It held that these satisfied the signature requirement, relying on North Carolina's Uniform Electronic Transactions Act.

The case arose from the settlement by the parties of their lawsuit in open court, during trial. The transcript reflected Plaintiff's agreement to convey property to the Defendant as a part of the settlement. A settlement agreement was circulated by email between the lawyers for the parties after that, but Plaintiff refused to sign.

The Electronic Signature Of Plaintiff's Counsel Satisfied The Statute Of Frauds

Plaintiff based his refusal to follow through on the Statute of Frauds, which requires an agreement to convey land to be in writing, and "signed by the party to be charged." The trial court ordered Plaintiff to sign the settlement papers, and the Court of Appeals majority affirmed. It held that there had been "total compliance" with the Statute of Frauds. It based its decision, in part, on North Carolina's Uniform Electronic Transactions Act, N.C. Gen. Stat. §66-311 et seq). As far as I know, this is the first mention of that statute by the Court of Appeals.

Judge Jackson, writing for the majority, said:

We note that this was not some barroom conversation between drunken neighbors, agreed to in jest, and written on a random scrap of paper. See Lucy v. Zehmer, 84 S.E.2d 516 (1954). This was an agreement among four parties represented by counsel, in a court of law, supervised by the presiding judge, who inquired of each party whether the terms were agreeable. The party to be charged -- plaintiff -- confirmed, 'Yes, that's my agreement.'

The Court observed that emails had then passed back and forth between counsel regarding the settlement, including drafts of a settlement agreement and a deed. This led to the Court's first impression reliance on the Uniform Electronic Transactions Act. The Court said:

Pursuant to that Act, plaintiff's counsel affixed his electronic signature to emails concerning the transaction. . . . When the hearing transcript, draft agreement, draft quitclaim deed, and associated emails are read together, as permitted by the statute of frauds, the settlement agreement that plaintiff was ordered to execute is in total compliance with the statute of frauds.

Other Grounds

The majority also provided other grounds for its decision, including the doctrine of judicial estoppel and a discussion whether the Statute of Frauds should apply at all to court announced settlements.

Continue Reading...

If You Are Proposing An In Camera Review, Try To Make It As Easy As Possible For The Judge

When lawyers are arguing over whether documents were properly withheld from production on the basis of attorney-client privilege, one side or the other will often say "let's have the Judge do an in camera review."  (Translation for nonlawyers reading this blog: let's drop all these documents on the Judge and let him or her decide).

Judges love this procedure, right? That would not be so.

A very short opinion the other day from the Business Court in Crockett Capital Corp. v. Inland American Winston Hotels is a good illustration. The decision suggests it is a good idea for both sides to take steps to make such a review as easy as possible for the Judge. There's also a good point on the scope of attorney-client privilege.

The Documents For The In Camera Review Were Highly Repetitive

The parties were arguing over redactions made to a number of emails on claimed grounds of privilege. In the ensuing in camera review. The parties provided what the Court described as "two large three-ring binders," one of which had clean copies of the claimed-to-be-privileged emails and the other of which had redacted copies of the emails produced.

We all know that emails proliferate like bunnies. The problem for the Court was that the emails in the binders had done exactly that. They were repeated over and over, in what the Court described as "repetitive strings of the same email time and time again." 

There's a process in e-discovery called "deduplication," which eliminates redundant copies of electronic documents. The lack of deduplication did not make the Court happy. Here's a quote:

Seldom has the Court been called upon to waste so much of its time because counsel did not fulfill their responsibilities in the meet and confer required by the Court's Local Rule 18.6. . . . It is apparent that counsel did not sit down and look at the documents. If so, they surely would have realized that the Court was being asked to look at repetitive strings of the same email time and time again. . . . If counsel had met and conferred they would have provided the Court with one copy of each email string rather than the copy for each recipient and saved the Court hours of wasted time. Eighty percent of the  documents would not have required Court review if counsel had done their job.

That the documents were in electronic format was not an excuse. The Court said:

Discovery in a digital age is expensive and difficult. That does not relieve counsel  of their obligation to carefully review documents and to sit down with the documents before them in a meet and confer and reduce to the fullest extent work required by the Court. Such scrutiny obviously did not occur in this case.

Privilege Issues

The Court also questioned some of the claims of privilege, which involved documents exchanged between businesspeople but copied to lawyers. The Court described these as "emails on which lawyers were simply copied with information about business decisions and no advice was sought or given."

It said: "[b]usiness decisions are not protected just because a lawyer is copied on a memo. Businessmen making business decisions may not hide behind their lawyers. Lawyers making business decisions cannot hide behind a privilege."

Claims Involving The "Raising Of Capital" Aren't Covered By North Carolina's Unfair And Deceptive Practices Statute

Claims involving the "raising of capital" don't fall within the scope of North Carolina's unfair and deceptive practices statute. That was the basis for the dismissal of Chapter 75 claims yesterday in two cases, one decided by the North Carolina Court of Appeals and the other by the North Carolina Business Court.

In the Court of Appeals case, Carcano v. JBSS, LLC, the plaintiffs claimed they had invested money based on misrepresentations by the defendants that the funds were for an interest in an LLC. The LLC, however, had never been formed.

The appellate court affirmed the dismissal of an unfair and deceptive practices claim based on these allegations, holding:

the most egregious allegations made against defendants, and the crux of plaintiffs' claims, is that defendants 'marketed membership in a fictional LLC' which involved 'deception, lies, and misrepresentations.' Even taken as true, these facts do not constitute unfair and deceptive practices so as to violate Chapter 75. The allegations merely assert that defendants asked plaintiffs to invest in a business arrangement. These are actions which are capital raising ventures among sophisticated business entrepreneurs.

The Business Court case, decided the same day, is Charlotte-Mecklenburg Hospital Authority v. Wachovia BankThe Hospital alleges that Wachovia mishandled millions of dollars of its funds. The Hospital asserted an unfair and deceptive practices claim, and argued that this wasn't an exempted securities transaction because it was really a claim involving "investment advice."

Judge Tennille dismissed the Chapter 75 claim, rejecting the Hospital's characterization and finding the claim to involve a securities transaction beyond the scope of the statute. He held that "given the 'raising capital' nature of this relationship, the Court finds that any wrongdoing by Wachovia in its administration of the securities lending program clearly falls within the purview of the securities transactions exception." 

Making Every Day Count: Time Computation Amendments To The Federal Rules Of Civil Procedure Take Effect December 1, 2009

Get ready for changes in how to count the days for meeting deadlines under Rule 6 of the Federal Rules of Civil Procedure. The upcoming changes abandon the practice of excluding weekend days and holiday days in calculating a response date when the period for the response is less than eleven days.

On December 1st, when "time computation amendments" to the Federal Rules become effective, a day will be counted as a day, whether it is a weekend day, Thanksgiving, Christmas, or any other recognized holiday day. That will be true regardless of the number of days allowed for the response.

New Rule 6(a)(1)(B) says to "count every day, including intermediate Saturdays, Sundays, and legal holidays." The objective of this change, according to the Report of the Judicial Conference, was to "make the method of computing time consistent, simpler, and clearer." If a deadline is measured in hours, The new Rule says hours are counted the same way. Every hour counts.

The full text of the new Rules is here, and what follows is a short summary of important time calculation points.

Counting Will Be A Little Different Depending On Whether You Are Counting Forward Or Backward

The basic rules of when to start counting days, and when to stop, won't change under the new Rule. The day of the act or event that triggers the count still isn't included. You start counting the following day. If the last day of the count falls on a weekend day or on a state or federal holiday, the count still extends forward to the next day that is not a weekend day or holiday.

The count also gets extended if the final day falls on a day that the court is "inaccessible," to the first accessible day. The term "inaccessible" isn't limited, as it is currently, to lack of accessibility caused by "weather or other conditions." The new advisory committee notes to Rule 6 suggest that inaccessibility might include "an outage of the electronic filing system."

Things are a little different if you are counting backwards. Why would you count backwards? Think of, for example, final pretrial disclosures due a certain number of days before trial.

The new Rule 6 says that to get to the "next day" when counting backwards, you continue to count backwards if the last day of the count is a weekend or holiday. So if your last day is Saturday, the filing is due the Friday before that Saturday.

Holidays are treated differently between a backward count and a forward count. If you are counting backwards, and the last day is a state holiday (not a federal holiday), then the count ends on the state holiday. If you hit a federal holiday, however, you continue counting backwards to the next business day. But forward counts treat state and federal holidays in the same way.

New Definition Of The "Last Day"

There's now specific definition of the meaning of "last day," contained in new Rule 6(a)(4). For paper filings, the last day ends "when the clerk's office is scheduled to close." For electronic filing, the last day ends "at midnight in the court's time zone."

What About Three Days For Mailing?

Rule 6(d), which gives lawyers an additional three days if served by mail or e-filing, has survived. That seems odd, given the definition of "last day" taking into account e-filing procedures and the widespread use of electronic filing.

Response Periods For Discovery Responses, Summary Judgment, And Other Matters

The change in counting methodology resulted in the adjustment of a number of different response time periods set out in the Rules.

The drafters of the new rules changed most time periods to be in multiples of seven, the thought being that deadlines then would usually fall on weekdays. So most ten day periods in the Rules became 14 days. The time for responding to a complaint, formerly 20 days, will be 21 days.

As for summary judgment, there is a new version of Rule 56(c)(1)(A), which says that in the absence of local rule, a party can move for summary judgment at any time up until thirty days after the close of discovery. The response is due 21 days later, and the reply is due 14 days after that.

The time for responding to interrogatories and document requests wasn't affected by the rule changes. Those remain at 30 days.

If you want a rule by rule breakdown of the change in time periods for responses, of which there are many, there are good summaries on the Smart Rules blog and also in an article at law.com. There's also an powerpoint from the federal judiciary website, titled "The Days Of Our District Court Lives."

Other Rules

Similar amendments were made to the Federal Rules of Appellate Procedure and the Federal Rules of Bankruptcy Procedure. There's an appellate rules powerpoint from the federal judiciary website, and also a bankruptcy rules powerpoint.

[I've done a followup post on the rules amendments about issues involving the effective date of the amendments. Specifically, it's on how the amendments apply to deadlines that were already running on the December 1 effective date.]

New Cases In The North Carolina Business Court: September 2009

Eleven new cases were designated to the Business Court in September 2009, including a class action against the North Carolina Department of Revenue claiming that the taxation of retirement benefits paid to certain state employees is unconstitutional (Pendergraph).

Bankers Life and Casualty Co. v. Barnes (Mecklenburg)(Diaz): claims for misappropriation of confidential information and trade secrets and violation of covenants not to compete.

Comor Corp. v. Comor Communications, LLC (Guilford)(Tennille): derivative action.

Global Promotions Group, Inc. v. Danas, Inc. (Wake)(Jolly): designated based on allegations that BB&T and its employee improperly allowed unauthorized electronic transfers of funds from Plaintiffs' accounts.

Holden v. Morlando (Guilford)(Tennille): derivative claims for diversion of corporate funds and claim for dissolution.

Howard v. Dunaways, (Mecklenburg)(Diaz): claim for payment of shareholder dividend allegedly wrongfully withheld.

Laney v. Corn (Gaston)(Diaz): claims for breach of franchise agreements and breach of fiduciary duty of franchisor, issues regarding liability of successor to franchisor.

Mason v. Raich (Guilford)(Tennille): complaint seeking confirmation of an arbitration award.

McDermott v. Bankers Life and Casualty Co. (Guilford)(Tennille): claims for fraud and unfair and deceptive practices involving sale by  defendants of annuity policies.

Pendergraph v. North Carolina Department of Revenue (Wake)(Jolly): lawsuit by taxpayers to have declared unconstitutional North Carolina's taxation of retirement benefits paid by the Local Governnmental Employees' Retirement System and the Teachers' and State Employees' Retirement System for persons who began participating in those plans before statutory amendments in 1989, and seeking class certification.

Presidium Retirement Advisors, Inc. v. Alliance Benefit Group Carolinas, LLC (Chatham)(Jolly): corporate governance claims, including breach of duty of directors, the election and removal of directors, and dissolution.

Sea Ranch II, Inc. v. Gusler (Dare)(Tennille): class action, filed pursuant to a settlement agreement of a case that originated in the Business Court, seeking appointment of receiver to sell a timeshare condominium.