North Carolina Lawyers Weekly
By DIANA SMITH, Staff Writer
No hostile takeovers were involved, but the North Carolina Business Court has already experienced quite a shakeup in the year’s first quarter.
In just three months, two-thirds of the leadership on the court has changed, bringing “fresh blood” to the 15-year-old institution, said founding Judge Ben Tennille, who retired March 1.
In January, the three-judge court welcomed a new jurist in Calvin E. Murphy of Charlotte, who replaced Albert Diaz after his confirmation to serve on the U.S. 4th Circuit Court of Appeals.
That same month, Judge John R. Jolly Jr. was appointed chief special superior court judge of the Business Court after Tennille announced his departure.
The turnover became complete two weeks ago when Tennille passed the gavel to former litigator Jim Gale at a swearing-in ceremony at the Elon University School of Law in Greensboro.
“I decided to take the Michael Jordan approach to quit while you can still play,” joked Tennille, who was tapped to establish the business court in 1995 by then-Gov. Jim Hunt.
The idea was to create a specialized forum for hearing complex corporate and commercial disputes in North Carolina outside of regular state court.
What Tennille created at first was a one-man show that he operated out of the trunk of his car.
Today, it’s a nationally recognized model that other states have used to launch their own pilot programs. Georgia and Florida both looked to North Carolina when they set up their business courts.
“And imitation is the sincerest form of flattery,” said Philadelphia lawyer and business court historian Lee Applebaum. “It was one of the early signs that North Carolina got it right.”
Its “careful evolution” through the addition of two judges, modification of jurisdictions and “very creative” use of alternative dispute resolution are even clearer signs of the court’s strength, he added.
But it’s a busy court, and that’s one of the principal challenges the judges are facing.
“Right now, the caseload growth is spiraling upward. We’re behind, and that dismays me,” Jolly said.
The court has a total of 247 pending cases, 12 of which are on appeal and 33 either stayed or inactive but kept open awaiting settlement or to enforce court-ordered administrations of settlement. The court closed 99 cases last year.
And today, all three judges carry roughly 100 cases each, Jolly said.
For Gale, that meant there was no easy break-in period after his arrival on March 1.
“I got sworn in, and they gave me a bunch of cookies that day. The next day I was in the court reading cases, and I’m reading cases today,” he said.
Overall, the Business Court has been assigned 855 cases from 66 counties since its inception. Of those, 608 have been closed.
Predictability
Many of the state’s attorneys have embraced the Business Court, acknowledging that having a case heard there provides some procedural luxuries because it has its own set of rules, e-filing and one judge assigned to a case from start to finish.
“It’s taken complex business cases that would have been disadvantaged in the regular superior court rotation and made the administration of justice for those cases more efficient,” said Raleigh lawyer Andy Penry.
Hunt added, “When you’re just going in to litigate and fight each other, you have to use every method available to win. It’s what you’re required to do. A business court is different. You’ve still got litigants, but you’ve got a judge who is encouraging and actively helping parties resolve their issues without hard, knockdown fighting.”
Business Court judges issue opinions, something that has helped build a body of case law that creates predictability for practitioners and their clients.
“They’re not particularly colorful issues, but they’re important,” Jolly explained. “They’re high-risk, high-dollar, high-volume cases, and they’re intensely important to the litigants. Some of them are important to the business community as a whole because of the issues they resolve. The ruling I make in one case may create law that will dictate what will happen to other businesses down the road for a long time.”
Case in point
One of the most heralded cases to come before the Business Court took place in April 2001, when North Carolina-based banking giants Wachovia and First Union announced plans to merge. Atlanta-based SunTrust Banks, which had also been courting Wachovia, announced a $14.7 million takeover bid less than a month later, sparking a volley of litigation.
Less than four months later, the Business Court issued key rulings that led to the quick conclusion of the Wachovia/First Union merger.
“That was a very important decision for Judge Tennille because since the Business Court started, he had been writing on a blank slate,” said Elon law professor Tom Molony. “He had to set up a procedure for evaluating board actions in stock-for-stock mergers by reviewing just general principles of law and how Delaware [which had the oldest business court] had done it.”
That same procedure was employed by Judge Diaz in 2008 for the Wachovia/Wells Fargo merger, Molony said.
The staying power of those written decisions bodes well for the constituents of the court, “and North Carolina as a whole,” Applebaum said.
“One of the signs of a successful institution is that it continues to survive with different people functioning in important roles,” he said. “I have little doubt it will continue to flourish. It’s no longer Judge Tennille in a courtroom with a computer. It’s an institution.”
