Five Reasons You Should Care About The Rulings From The North Carolina Business Court Even Though The NC Court Of Appeals Says You Shouldn't

The NC Court of Appeals said earlier this month in Browne v. Thompson that the decisions of the Business Court have "no precedential value."  Being a big fan of the Business Court, that rankled me. And being the author of a blog which focuses on the Business Court, it caused me to question my reason for writing.

In the Browne opinion, which affirms an opinion from Judge Jolly granting a motion to dismiss the case, Judge Steelman of the COA dissed the Business Court at the same time he affirmed it.  Judge Steelman was scoffing at the Plaintiffs’ reliance on several Business Court decisions in support of their unsuccessful appeal. He said:

The remaining cases cited by plaintiffs are decisions of the North Carolina Business Court. The Business Court is a special Superior Court, the decisions of which have no precedential value in North Carolina.

That was a strong statement. NO precedential value? Really?  Not even a little bit? So why should North Carolina lawyers care what the Business Court does (or why should they even bother reading this blog)?

Here are my top five reasons to disagree with Judge Steelman:

First, the Business Court is on the front line of business law issues in North Carolina. If you want to be up to date on corporate matters, you need to know what the Court is dealing with.  Disregard it at your peril, precedential or not

Second, the Court was formed, as stated by Rule 2.2 of the General Rules of Practice, in recognition of the "desirability of a state having a substantial body of corporate law that provides predictability for business decision making. Also, it is essential that corporations litigating complex business issues receive timely and well reasoned written decisions from an expert judge."  There's no predictability without precedent.

Third, the Business Court is a quality court. It has smart, capable Judges. The opinions are thorough, well-reasoned, and well-written. The Court has been described as “a model for the nation.”  The opinions are worth treating as having precedential value.

Fourth, while Judge Steelman is probably right from a legal standpoint that the Business Court's decisions are not binding precedent, he is ignoring the value of those decisions as “persuasive precedent."  What's the difference in the types of precedent?

Persuasive precedent:

is precedent or other legal writing that is related to the case at hand but is not a binding precedent on the court under common law legal systems such as English law. However, persuasive authority may guide the judge in making the decision in the instant case. Persuasive precedent may come from a number of sources such as lower courts, "horizontal" courts, foreign courts, statements made in dicta, treatises or law reviews.

I don't think the term has ever been used by the NC Court of Appeals.  The best definition I've found for it comes from Wikipedia

It's not unusual for appellate courts to look to trial courts for persuasive guidance.  Does the Fourth Circuit Court of Appeals disregard the opinions of the District Courts within the geographic area of the Circuit?  Of course not.  And other state appellate courts look to trial court opinions for their persuasive value  See, e.g.,State Farm Fire & Cas. Co. v. Estate of Mehlman 589 F.3d 105, 108 (3d Cir. 2009)("Inasmuch as Pennsylvania law governs this action we treat Pennsylvania Supreme Court opinions as binding precedent and Pennsylvania Superior Court opinions as persuasive precedent.").

Last, if you are litigating in the Court, and you don't know how Business Court Judge Jolly, Judge Gale, or Judge Murphy ruled in the past in similar cases, you are litigating in the dark.  Maybe their past rulings are not precedent but only representative of their individual habit, but it's good to know about them nevertheless.

Maybe the Court of Appeals could take their heads out of the sand about the precedential value of Business Court opinions.

And if you have time, let me know if any of you have been successful in persuading non-Business Court Superior Court Judges that they should follow a decision of the Business Court or whether their reaction was to say there's "no precedential value."




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Lee Applebaum - April 29, 2012 4:42 PM

These opinions would certainly seem to retain persuasive value, and would certainly seem to be good predictors of how the Business Court itself will rule on issues until a time when there is appellate precedent to the contrary.

Moe - August 28, 2012 9:07 AM

It is always interesting to see what appellate advocacy and business courts say. I would never dismiss a ruling like this. It is interesting to me that they want to keep this so quiet.

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