SAWYER v. MARKET AM., INC.,

STEVE SAWYER,
Plaintiff,

v
.
Guilford County


No. 06 CVS 4430
MARKET AMERICA, INC.,
Defendant.

Appeal by Plaintiff from judgment entered 9 May 2007 by Judge
John O. Craig, III, in Guilford County Superior Court. Heard in
the Court of Appeals 28 April 2008.

Carruthers & Roth, P.A., by Kenneth R. Keller, and William J.
McMahon, IV, for Plaintiff-Appellant.

Womble Carlyle Sandridge & Rice, PLLC, by Pressly M. Millen,
for Defendant-Appellee.

ARROWOOD, Judge.

Steve Sawyer, Plaintiff, appeals from an order granting
Defendant’s motion for partial summary judgment on Plaintiff’s
claim under the North Carolina Wage & Hour Act. We affirm.
Plaintiff is a resident of the State of Oregon. Defendant,
Market America, Inc., is a North Carolina corporation based in
Greensboro, North Carolina. On 1 December 2004 the parties met in
Greensboro and signed an “Independent Contractor Agreement.”
Pursuant to this agreement, Plaintiff performed services for
Defendant from December 2004 until his contract was terminated on
30 January 2006. Plaintiff’s work for Defendant was performed
outside North Carolina. In March 2006 Plaintiff filed suit against Defendant, seeking
recovery of certain sums to which Plaintiff claimed entitlement
under the terms of the parties’ agreement. Plaintiff brought
claims for breach of contract and for violation of the North
Carolina Wage and Hour Act, N.C. Gen. Stat. § 95-25.1 (2007), et
seq. In April 2007 Defendant moved for partial summary judgment on
Plaintiff’s claim under the North Carolina Wage and Hour Act. On
9 May 2007 the trial court granted Defendant’s motion and entered
summary judgment for Defendant on Plaintiff’s North Carolina Wage
and Hour Act claim. The court ruled that “the North Carolina Wage
& Hour Act does not apply to Plaintiff as an individual who resides
and primarily works outside of the State of North Carolina[.]”
From this order Plaintiff appeals.

Standard of Review

Plaintiff’s appeal from the trial court’s summary judgment
order “is interlocutory because the trial court’s order ‘does not
dispose of the case, but leaves it for further action by the trial
court in order to settle and determine the entire controversy.’ An
interlocutory order is immediately appealable if the trial court
certifies that: (1) the order represents a final judgment as to one
or more claims in a multiple claim lawsuit or one or more parties
in a multi-party lawsuit, and (2) there is no just reason to delay
the appeal. N.C.G.S. § 1A-1, Rule 54(b) [(2007)].” Hamby v.
Profile Prods., L.L.C., 361 N.C. 630, 633-34, 652 S.E.2d 231, 233
(2007) (quoting Veazey v. City of Durham, 231 N.C. 357, 362, 57
S.E.2d 377, 381 (1950)). In the instant case, the trial courtcertified its summary judgment order for immediate review, as
provided in Rule 54(b).
“We review a trial court’s order for summary judgment de novo
to determine whether there is a ‘genuine issue of material fact’
and whether either party is ‘entitled to judgment as a matter of
law.’” Robins v. Town of Hillsborough, 361 N.C. 193, 196, 639
S.E.2d 421, 423 (2007) (quoting Summey v. Barker, 357 N.C. 492,
496, 586 S.E.2d 247, 249 (2003); and citing N.C. Gen. Stat. § 1A-1,
Rule 56(c)). In the case sub judice, neither party contends that
there exist genuine issues of material fact. Rather, the
dispositive appellate issue is whether, as a matter of law,
Defendant was entitled to summary judgment.

______________________

The issue presented on appeal is whether Plaintiff, an Oregon
resident performing work outside the State of North Carolina, can
bring a claim against Defendant under the North Carolina Wage and
Hour Act.
Preliminarily, we address the validity of the North Carolina
choice of law provision in the Independent Contractor Agreement.
A “choice of law provision[] names a particular state and provides
that the substantive laws of that jurisdiction will be used to
determine the validity and construction of the contract, regardless
of any conflicts between the laws of the named state and the state
in which the case is litigated.” Johnston County v. R.N. Rouse &
Co., 331 N.C. 88, 92, 414 S.E.2d 30, 33 (1992). In the instant
case, the Independent Contractor Agreement contains a clauseproviding in pertinent part that the “Agreement shall be governed
and construed under the laws of the State of North Carolina,” and
the parties agree that North Carolina law should be utilized to
resolve the issues in this case.
“This Court has held that where parties to a contract have
agreed that a given jurisdiction’s substantive law shall govern the
interpretation of the contract, such a contractual provision will
be given effect.” Tanglewood Land Co. v. Byrd, 299 N.C. 260, 262,
656 261 S.E.2d 655, 656 (1980). “We have previously held that ‘the
parties’ choice of law is generally binding on the interpreting
court as long as they had a reasonable basis for their choice and
the law of the chosen State does not violate a fundamental public
policy of the state or otherwise applicable law.’” Torres v.
McClain, 140 N.C. App. 238, 241, 535 S.E.2d 623, 625 (2000)
(quoting Behr v. Behr, 46 N.C. App. 694, 696, 266 S.E.2d 393, 395
(1980)).
We conclude that there is no obstacle to the application of
North Carolina law to this appeal. Accordingly, we will apply the
substantive law of North Carolina to our determination of the
territorial ambit of the North Carolina Wage and Hour Act.
Plaintiff first asserts that the choice of law provision
effectively removed the scope of the North Carolina Wage and Hour
Act from consideration. He argues that Defendant’s assertion that
the North Carolina Wage and Hour Act does not have extraterritorial
effect “ignores the determinative fact that the parties agreed”
that their agreement would be governed by North Carolina law. Plaintiff appears to take the position that our general
application of North Carolina law automatically brings him within
the scope of the North Carolina Wage and Hour Act and obviates the
need to determine whether the statute has any extraterritorial
effect. However, Plaintiff fails to articulate any argument, or
cite any authority, that supports this view. Moreover, we note
that Plaintiff’s argument has previously been rejected in other
jurisdictions.
For example, in Highway Equipment Co. v. Caterpillar, Inc.,
908 F.2d 60 (6th Cir. 1990), an Ohio plaintiff sued an Illinois
defendant for breach of contract and violation of the Illinois
Franchise Disclosure Act (IFDA). The trial court granted
defendant’s motion for judgment on the pleadings on the plaintiff’s
IFDA claim, on the grounds that the IFDA could not be applied
extraterritorially to an Ohio plaintiff. On appeal the plaintiff
argued that the Illinois choice of law provision in the parties’
agreement gave the IFDA extraterritorial application to the Ohio
plaintiff. The Court disagreed, noting that plaintiff did “not
present any evidence that the IFDA was intended to apply outside
Illinois,” and concluding that “the IFDA was enacted for the
protection of Illinois residents only.” See also, e.g., Gravquick
A/S v. Trimble Navigation Int’l, 323 F.3d 1219, 1222 (9^th Cir. Ct.
App. 2003) (“The contract’s choice of law clause states that the
[contract] is to ‘be governed by and construed under the laws of
the State of California[.]’ . . . Honoring that choice of law does
not give extraterritorial application to the [California]statute[.]”). We conclude that the choice of law provision in the
parties’ contract, although it requires us to apply North Carolina
law, does not change the limits or requirements of the North
Carolina statutes thus applied. This assignment of error is
overruled.
Plaintiff also argues that the court erred by granting summary
judgment, on the grounds that North Carolina North Carolina Wage
and Hour Act is “not limited in application to residents of North
Carolina.” We disagree and hold that the North Carolina Wage and
Hour Act does not apply to the wage payment claims of a nonresident
who neither lives nor works in North Carolina.
N.C. Gen. Stat. § 95-25.1 (2007) provides that:
(a) This Article shall be known and may be cited
as the “Wage and Hour Act.”

(b) The public policy of this State is declared as
follows: The wage levels of employees, hours
of labor, payment of earned wages, and the
well-being of minors are subjects of concern
requiring legislation to promote the general
welfare of the people of the State without
jeopardizing the competitive position of North
Carolina business and industry. The General
Assembly declares that the general welfare of
the State requires the enactment of this law
under the police power of the State.

The plain language of the statute identifies it as being for the
benefit of North Carolina residents. This Court has noted that the
“Wage and Hour Act was enacted to safeguard the hours worked by and
the wages paid to ‘the people of the State without jeopardizing the
competitive position of North Carolina business and industry.”
Horack v. S. Real Estate Co. of Charlotte, Inc., 150 N.C. App. 305,309, 563 S.E.2d 47, 52 (2002) (quoting N.C. Gen. Stat. §
95-25.1(b)([2007])).
Plaintiff directs our attention to the absence of statutory
language that explicitly restricts application of the North
Carolina Wage and Hour Act to North Carolina residents. Plaintiff
argues that, because the statute does not expressly bar its
extraterritorial application, the North Carolina Wage and Hour Act
may properly be applied to a resident of the State of Oregon. We
disagree, and note the long established common law rule to the
contrary.
The U.S. Supreme Court has long held that “[l]egislation is
presumptively territorial and confined to limits over which the
law-making power has jurisdiction.” Sandberg v. McDonald, 248 U.S.
185, 195, 63 L. Ed. 200, 204 (1918) (citing American Banana Co. v.
United Fruit Co., 213 U.S. 347, 53 L. Ed. 826 (1909)). “No law has
any effect, of its own force, beyond the limits of the sovereignty
from which its authority is derived.” Hilton v. Guyot, 159 U.S.
113, 163, 40 L. Ed. 95, 108 (1895). The North Carolina Supreme
Court has also shown a longstanding adherence to this rule:
The law is unmistakably clear that the
Legislature has no power to enact statutes,
even though in general words, that can extend
in their operation and effect beyond the
territory of the sovereignty from which the
statute emanates. . . .“Prima facie, every
statute is confined in its operation to the
persons, property, rights, or contracts, which
are within the territorial jurisdiction of the
legislature which enacted it. The presumption
is always against any intention to attempt
giving to the act an extraterritorial
operation and effect.” . . . No presumption
arises, from a failure of the state throughits legislative authority to speak on the
subject, that the state intends to grant any
right, privilege, or authority under its laws
to be exercised beyond its jurisdiction.

McCullough v. Scott, 182 N.C. 865, 877-78, 109 S.E. 789, 796 (1921)
(quoting Walbridge v. Robinson, 22 Idaho 236, 245, 125 P. 812, 815
(1912) (citations omitted).
Thus, although “a state has broad power to establish and
enforce standards of conduct within its borders relative to the
health of everyone there[,]” Barsky v. Board of Regents, 347 U.S.
442, 449, 98 L. Ed. 829, 838 (1954), “[i]t is axiomatic that courts
have no extraterritorial jurisdiction.” In re De Ford, 226 N.C.
189, 192, 37 S.E.2d 516, 518 (1946). Therefore, “general words
used in statutes are taken as limited to cases within the
jurisdiction of the Legislature passing the statute, and confining
its operation to matters affecting persons and property in such
jurisdiction.” McCullough, 182 N.C. at 877, 109 S.E. at 796. In
McCullough, our Supreme Court noted that its holding was not only
in accord with long-established law, but also constituted good
public policy:
Either the statute applies . . . within the
State . . . or its scope is unlimited, and . .
. the board may hold examinations anywhere and
everywhere it sees fit. And if this board may
go outside the state to hold examinations, why
not every other examining board of the State
do likewise, if the place is left to its
discretion? Obviously, this would be
subversive of public policy, of the spirit and
intent of the law, would defeat the very ends
which these protective statutes were enacted
to accomplish[.]

Id. 182 N.C. at 878, 109 S.E. at 796-97. We conclude that the North Carolina Wage and Hour Act does not
provide a private cause of action for a nonresident who neither
lived nor worked in North Carolina. We further conclude that the
trial court did not err and that its order granting partial summary
judgment for Defendant on Plaintiff’s North Carolina North Carolina
Wage and Hour Act claim should be
Affirmed.
Chief Judge MARTIN and Judge BRYANT concur.

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