This is an opinion from Judge Diaz before he joined the Business Court, in which he denied a Motion for Sanctions.
The basis for the Motion was that Plaintiff should not have taken the position that North Carolina law applied to the covenant not to compete at issue. The Defendant worked for Plaintiff in North Carolina and the agreement gave a North Carolina address for the Defendant, but it had been signed by the Defendant in Virginia and by the Plaintiff in Wisconsin.
The case, which was affirmed by the North Carolina Court of Appeals in an unpublished opinion, contains a good discussion of the relevant Rule 11 inquiries. The Court found the facts of the case to be "muddled," and that they "would test the most seasoned of choice of law practitioners." The Court found that the Plaintiff’s lawyers had made the requisite "reasonable inquiry" before deciding that North Caroiina law applied, and accordingly denied the Motion for Rule 11 Sanctions.