I had never heard before of a "privacy tort" claim for "intrusion into seclusion." But it exists in North Carolina per Judge Gale’s Opinion in Dishner v. Goneau, 2017 NCBC 7, decided in the NC Business Court this week. This is not a brand new tort. It has been recognized by the NC
I’m a business litigator in North Carolina, with Brooks Pierce McLendon Humphrey & Leonard, LLP.
I grew up in New York, went to college there (at Union College in Schenectady), and then came to North Carolina to law school at UNC-Chapel Hill. I clerked for United States District Judge Frank Bullock of the U.S. District Court for the Middle District of North Carolina after graduating, and then joined Brooks Pierce.
A lot of North Carolina court decisions have questioned whether a claim for "aiding and abetting a breach of fiduciary duty" can be made in North Carolina (many of them are cited in ¶16 of the Islet Sciences Opinion referenced below). Most of those decisions have cast doubt on whether that claim is recognized at…
There are new Rules for the NC Business Court In effect, as of January 1, 2017. If you have a case in the Business Court, or are expecting to designate a case there, you should look them over. They are applicable to all actions currently pending in the Business Court.
If you are not willing…
Continue Reading Amended Rules of the NC Business Court (effective 1-1-17)(hyperlinked)
The NC Supreme Court’s jurisdiction over appeals from the Business Court expanded significantly with the passage of a bill by the NC General Assembly "modernizing" the Business Court in 2014. A party can appeal even interlocutory orders of the Business Court to the state’s highest Court. N.C. Gen. Stat. §7A-27(a).
What about an Order from the…
There is probably nothing more routine in litigation today than a Plaintiff’s counsel sending a "preservation letter." A preservation letter, if you’ve never sent or received one, is a letter sent at the outset of litigation — or even before it begins — telling the opposing counsel or party (or even a non-party) to make…
If you’ve been reading this blog for any length of time, you know that I am very sour on substantial attorneys’ fees being awarded to the lawyers for class action plaintiffs who obtain nothing more for the class than valueless additional disclosures with regard to a merger transaction. You can read some of those posts here and here.
The Business Court has routinely been awarding substantial fees for disclosure only settlements up until now, but the Business Court’s decision last week in In re Newbridge Bancorp Shareholder Litig., 2016 NCBC 87 sends the message that its relaxed examination of the value of such settlements is probably at an end. That is partly based on the Delaware Court of Chancery’s decision in In re Trulia, Inc. Stockholder Litig., 129 A.3d 886 (Del. Ch. 2016), which was characterized as the "death knell" there for such settlements.
Judge Bledsoe said in the Newbridge Opinion:
the North Carolina Business Court has historically been guided in its consideration of motions to approve, and award attorneys’ fees in connection with, “disclosure-based” settlements of merger-based class action litigation by the body of persuasive case law developed by the Delaware courts over a period of many years. The Court is also aware that the Delaware courts have recently subjected such motions to much more exacting scrutiny than they have in the past. See, e.g., In re Trulia, Inc. Stockholder Litig., 129 A.3d 886 (Del. Ch. 2016).
In the absence of contrary instructions from the North Carolina appellate courts, the Court finds the recent trend in the Delaware case law requiring enhanced scrutiny of disclosure-based settlements to merit careful consideration for potential application in this State. The Court recognizes, however, that the application of Delaware’s recent case law to the Motions would represent a marked departure from this Court’s past practices in connection with the consideration of such motions. As a result, the Court declines to apply enhanced scrutiny to its consideration of the Motions in this case but expressly advises the practicing bar that judges of the North Carolina Business Court, including the undersigned, may be prepared to apply enhanced scrutiny of the sort exercised in Trulia to the approval of disclosure-based settlements and attendant motions for attorneys’ fees hereafter.
Op. Pars. 4 and 5.
Notwithstanding Judge Bledsoe’s decision that "enhanced scrutiny" would not be applied in the case before him, he did undertake a pretty close review of the value of the disclosures obtained for the class, and also the amount of the attorneys fees being awarded.
The Disclosures Obtained By Class Counsel Did Not Justify The Amount Of Fees Sought
He said that some of the disclosures touted as the basis for the fee award were "not material" or of "marginal benefit." Op. Pars. 64-65, 71 & n. 10. He said that the Delaware Court of Chancery had "long rejected" the fallacy "that increasingly detailed disclosure is always material and beneficial disclosure." Op. ¶64 (quoting Dent v. Ramtron Int’l Corp., No. 7950-VCP, 2014 Del. Ch. LEXIS 110, at *47 (Del. Ch. June 30, 2014)).
After that review, he sliced in half the amount of fees sought by class counsel, finding their fee request (of almost $275,000 based on an implied hourly rate of almost $525) was "not fair and reasonable, but rather excessive based on the circumstances of this case and the record before the Court." Op. ¶69.
On the limited fee information provided by the class plaintiff’s counsel, Judge Gale said that the $135,000 fee award he made yielded an implied average hourly rate of $258. That probably seemed pretty skimpy to those lawyers, who said that the "usual and customary rates" for the senior lawyers for the Court-approved Co-Lead Counsel ranged from $650-$850 per hour. Op. ¶50.
But the lawyers for the class did little to justify their fees. They did not offer any affidavits of North Carolina attorneys attesting to “the fees customarily charged in the locality for similar legal services,” as contemplated by the Revised Rule 1.5(a)(3) of Professional Conduct. Instead, they premised their fee request on a 2015 survey of billing rates published in the National Law Journal. Judge Bledsoe rejected that, saying that "the NLJ Survey does not report the specific range of hourly rates customarily charged in North Carolina for legal services of the sort Plaintiffs’ counsel provided here." Op. ¶51.
The Business Court Said That "Typical Fees" In North Carolina For Complex Litigation Are $250-$450 Per Hour
Left without any benchmarks for what North Carolina lawyers charged as "customary rates" for complex commercial litigation, Judge Bledsoe looked to affidavits offered to the Business Court in other class action fee applications which stated that "typical fees charged in North Carolina for handling complex commercial litigation range from $250 to $450 per hour." Op. ¶52. He also relied on the hourly fees charged by lawyers appointed by the Business Court to serve as receivers or as counsel for receivers (which ranged from $225 to $475 per hour). Op. ¶54.
Another Important Caution For Future Fee Applications
Another deficiency in the fee application was the failure to supply detailed time records justifying the time spent. The fee applicants instead presented only summary charts showing the total hours spent on the lawsuit. In another caution for lawyers requesting approval of fee applications, Judge Bledsoe said:
the Court notes that attorneys’ fees’ petitions in this Court are typically supported by detailed attorney time records and advises that the Court will be reluctant to approve future petitions for attorneys’ fees lacking such evidentiary support.
Op. ¶45 & n. 8 (emphasis added).
Judge Bledsoe also said that there was nothing so special about the work done by class counsel to justify the higher hourly rate that they requested. He said that: the nature of the work performed by Plaintiffs’ counsel "could have been performed fully by competent North Carolina counsel and that the demands of the [litigation] did not require Plaintiffs to retain counsel from outside North Carolina in order to prosecute the [litigation]. Op. ¶55.
If you think that I am being too hard on Plaintiffs’ counsel, I should point out that Judge Bledsoe said he found that:
Plaintiffs’ counsel are highly-regarded, highly-experienced class action counsel that have been involved in a number of significant class action matters including matters resulting in substantial monetary recovery for the class.
Regardless of their qualifications, in the future these lawyers (who were undoubtedly disappointed in this ruling due to their success last year in getting a $550,000 fee award approved by a different Business Court Judge) and other lawyers for class action plaintiffs expecting big fees for anticipated disclosure only settlements of marginal value might need to find some other state in which to file those claims.
No more feeding at the trough in North Carolina.
A Couple Of Other Notes On This Opinion
One of the remarkable things about this Opinion is that there were no objections to the fees sought by the attorneys for the class. Judge Bledsoe resolved, on his own accord, to closely review and reduce the fees sought.
Second, I recognize that even class actions leading to immaterial disclosure only settlements involve the need for North Carolina lawyers to defend those claims. So it would be a shame if those out of state lawyers filing the suits leading to these settlements were to stay away from North Carolina altogether.
North Carolina cases that are filed in an "improper county" can be transferred to the "proper county" if the "defendant, before the time of answering expires, demands in writing that the trial be conducted in the proper county." N.C. Gen Stat. §§1-83.
Multiple Claims With Different Venue Requirements
Well, what if there’s…
There a probably few things in legal practice as annoying as getting a Notice of Deposition for your client’s in-house counsel.
Are you willing to pursue a Motion for a Protective Order to prevent the deposition? The Defendant in a case before the Business Court tried that, but its Motion was denied in an Order…