BUSINESS COURT MODERNIZATION.

View NCGA Bill Details2013-2014 Session
Senate Bill 853 (Public) Filed Tuesday, May 27, 2014
AN ACT TO MODERNIZE THE BUSINESS COURT BY MAKING TECHNICAL, CLARIFYING, AND ADMINISTRATIVE CHANGES TO THE PROCEDURES FOR COMPLEX BUSINESS CASES, TO STREAMLINE THE PROCESS OF CORPORATE REORGANIZATION UTILIZING HOLDING COMPANIES, AND TO ESTABLISH A BUSINESS COURT MODERNIZATION SUBCOMMITTEE OF THE JOINT LEGISLATIVE ECONOMIC DEVELOPMENT AND GLOBAL ENGAGEMENT OVERSIGHT COMMITTEE.
Intro. by Rucho, Barringer.

Status: Ch. SL 2014-102 (Senate Action) (Aug 6 2014)

SOG comments (3):

Long title change

Committee substitute to the 1st edition changed the long title. Original long title was AN ACT TO MODERNIZE THE BUSINESS COURT BY MAKING TECHNICAL, CLARIFYING, AND ADMINISTRATIVE CHANGES TO THE PROCEDURES FOR COMPLEX BUSINESS CASES.

Long Title Change

House committee substitute to the 4th edition changes the long title. The original title is as follows:

AN ACT TO MODERNIZE THE BUSINESS COURT BY MAKING TECHNICAL, CLARIFYING, AND ADMINISTRATIVE CHANGES TO THE PROCEDURES FOR COMPLEX BUSINESS CASES AND TO STREAMLINE THE PROCESS OF CORPORATE REORGANIZATION UTILIZING HOLDING COMPANIES, AND TO CREATE A THREE‑JUDGE PANEL TO RULE ON CLAIMS THAT AN ACT OF THE GENERAL ASSEMBLY IS FACIALLY INVALID BASED UPON THE NORTH CAROLINA OR UNITED STATES CONSTITUTIONS.

Long title change

Conference report to the 5th edition changed the long title. Previous long title was A BILL TO BE ENTITLED AN ACT TO MODERNIZE THE BUSINESS COURT BY MAKING TECHNICAL, CLARIFYING, AND ADMINISTRATIVE CHANGES TO THE PROCEDURES FOR COMPLEX BUSINESS CASES, TO STREAMLINE THE PROCESS OF CORPORATE REORGANIZATION UTILIZING HOLDING COMPANIES, TO VALIDATE CORPORATE FORUM SELECTION PROVISIONS CONTAINED IN ARTICLES OF INCORPORATION AND BYLAWS, AND TO CREATE A WORKING GROUP TO STUDY JUDICIAL EFFICIENCY AND BUSINESS COURT MODERNIZATION.

 

Bill History:

S 853/S.L. 2014-102

Bill Summaries:

  • Summary date: Aug 14 2014 - More information

    AN ACT TO MODERNIZE THE BUSINESS COURT BY MAKING TECHNICAL, CLARIFYING, AND ADMINISTRATIVE CHANGES TO THE PROCEDURES FOR COMPLEX BUSINESS CASES, TO STREAMLINE THE PROCESS OF CORPORATE REORGANIZATION UTILIZING HOLDING COMPANIES, AND TO ESTABLISH A BUSINESS COURT MODERNIZATION SUBCOMMITTEE OF THE JOINT LEGISLATIVE ECONOMIC DEVELOPMENT AND GLOBAL ENGAGEMENT OVERSIGHT COMMITTEE. Enacted August 6, 2014. Sections 1, 3, 4, and 6 are effective October 1, 2014. The remainder is effective August 6, 2014, unless otherwise provided.

     

  • Summary date: Aug 1 2014 - More information

    Clarifications & Corrections to the conference report summary:

    Amends GS 7A-45.3 to exempt an order effecting a settlement agreement or a jury verdict from the orders in connection with which the presiding Business Court judge is required to issue a written opinion.

    Amends GS 7A-45.4 to delete the exception preventing parties from designating disputes that involve enforcing a noncompetition or nonsolicitation covenant against an individual employee as a mandatory complex business case.


  • Summary date: Jul 31 2014 - More information

    Conference report makes the following changes to the 5th edition.

    Amends GS 7A-45.3 to exempt an order effecting a settlement agreement or a jury verdict in a complex business case from having to be issued by the presiding Business Court Judge.

    Amends GS 7A-45.4 to remove disputes involving unfair competition law from the list of actions which any party may designate as a mandatory complex business case. Deletes the exception to designating disputes that involve enforcing a noncompetition or nonsolicitation covenant against an individual employee as a mandatory complex business case.Deletes requirement that the Chief Justice of the Supreme Court upon receiving a Notice of Designation, via email, from the party designating an action as a mandatory complex business case assign the action to a specific Business Court Judge. Allows a party who opposes the designation of an action as a mandatory complex business case to appeal in accordance with GS 7A-27(a) but deletes the option of appealing the designation under the North Carolina Rules of Appellate Procedure applicable to civil cases. Makes clarifying changes to subsection (g) of GS 7A-45.4 to provide that if an action required to be designated as a mandatory complex business case under subsection (b) of this section is not designated as such, then the Superior Court, where the action has been filed, must enter an order on its own motion to stay the action until it has been designated as a mandatory complex business case by the party required to make that designation in accordance with subsection (b) of this section. Rewrites subsection (h), which provides that nothing in GS 7A-45.4 is intended to allow personal injury actions under tort law to be designated as mandatory complex business cases, to additionally provide that nothing in this section is intended to confer, enlarge, or diminish the subject matter jurisdiction of any court.

    Amends GS 7A-305 to to clarify that if a case is designated as a mandatory complex business case under GS 7A-45.4, the party filing the designation must pay an additional $1,100 when the case is assigned to a Business Court Judge. Provides that if a case is designated as a mandatory complex business case under Rule 2.1 and Rule 2.2 of the General Rules of Practice for the Superior and District Courts,the plaintiff must pay an additional $1,100 when the case is assigned to a Business Court Judge. States that the payments go to the support of the General Court of Justice.

    Deletes proposed GS 55-7-50, which provided that exclusive forum or venue provisions in acorporation'sbylaws or articles of incorporation for litigation relating to theinternal affairs of the corporation were valid and enforceable.

    Amends GS 1A-1, Rule 8(a)(2), to require that in all actions involving a material issue related to any of the subjects listed in subdivisions (1), (2), (3), (4), (5), or (8) of GS 7A-45.4(a), the pleading must state whether or not relief is demanded for damages incurred or to be incurred in an amount equal to or exceeding $5 million. Effective when the section becomes law and applies to all actions begun on or after thatdate.

    Alsodeletesprovisions of Section 8 of this act, which established an 18-member WorkingGroup on Judicial Efficiency and Business Court Modernization. Instead, rewrites Section 8 to create a Subcommittee on Business Court Modernization (Subcommittee) within the Joint Legislative Economic Development and Global Engagement Oversight Committee (Committee).

    Requires that the Subcommittee have a minimum of six members, with an equal number of Senate and House members appointed by the President Pro Tempore of the Senate (President Pro Tem) and the Speaker of the House (Speaker) from among their respective chambers' membership on the Committee. Directs the Speaker and the President Pro Tem to each select one member to serve as co-chairs of the Subcommittee. Provides that the Subcommittee may study the implementation of this act, its efforts to modernize complex business cases, and legislative improvement to the operations and management of the General Court of Justice. Addresses the organization and functions of the Subcommittee, including access to clerical services and covering the expenses of the Subcommittee. Provides that the Subcommittee may submit an interim report on the results of its study, including any proposed legislation, to the Committee at any time. Requires the Subcommittee to submit its final report on its results, including any proposed legislation, to the Committee before the convening of the 2015 General Assembly. Directs the Committee to submit a final report of its findings and recommendations to the 2015 General Assembly by filing the report with the President Pro Tem, the Speaker, and the Legislative Library. Requires that the Subcommittee terminate either upon the convening of the 2015 General Assembly or the filing of its final report with the Committee, whichever comes first.

    Except as otherwise indicated, the effective dates for the provisions of this act remain the same.

    Makes conforming changes to the title of this act to reflect the amended content.


  • Summary date: Jul 1 2014 - More information

    The House committee substitute to the 4th edition makes the following changes.

    Amends GS 7A-45.4(a)(9), regarding the designation of complex business cases, to clarify that a required condition to be met under which contract disputes may be designated as complex business cases is that at least one plaintiff and one defendant is a corporation, partnership, or limited liability company, including any entity authorized to transact business in North Carolina under Chapter 55, 55A, 55B, 57D, or 59 of the General Statutes (was, only specified that one plaintiff or one defendant be an entity transacting business under the specified statutes in North Carolina). Also amends GS 7A-45.4(b)(1) regarding actions required to be designated as mandatory complex business cases to include a civil action under GS 105-241.17 that contains a constitutional challenge to a tax statute among the cases that must be designated as a mandatory complex business case by the petitioner or plaintiff. Amends GS 7A-45.4(g) to provide that if anaction was required to be designated as a mandatory complex business case under subsection (b)(1) or (b)(3) of GS 7A-45.4 and was not designated as such, thenthe Superior Court in which the action was filed isrequiredto enter an ordersua sponte(of its own accord) to stay the action until it has been properly designated under this section. Provides that if the action is required to be designated as a mandatory complex business case under subjection (b)(2) of this section but is not designated as such, then theSuperiorCourt in which theaction was filed mayenter an ordersua sponte(of its own accord) to stay the action until it has been properly designated under this section.Provides that the filing fee required under GS 7A-305(a)(2) is payable on a pro rata basis by each party to the action (was, required the party designating the action as a mandatory complex business case to pay the filing fee).Effective October 1, 2014.

    Deletes changes to Article 26A of GS Chapter 1 that created a three-judge panel to hear certain constitutional challenges to acts of the General Assembly.

    Makes Section 6 of this act,enactingnew GS 55-11-11, Merger to effect a holding companyreorganization, effective October 1, 2014 (was, August 1, 2014).

    Adds new GS 55-7-50 to declare that a provision in the articles of incorporation or bylaws of a corporation that specifies that North Carolina is the exclusive forum or venue for litigation relating to the internal affairs of the corporation is valid and enforceable.

    Adds a new Section 8 to this act, which creates an 18-member working group to study (1) judicial efficiency and (2) Business Court modernization. Specifies qualifications of the appointees and designates the appointing authorities. Provides criteria for the operation of the Working Group. Provides that all expenses of the Working Group are to be paid from the Legislative Services Commission's Reserve for Studies.Providesthat the Working Group may submit an interim report at any time to theGeneral Assembly. Directs the Working Group to submit a final report on the results of its study to the General Assembly before the convening of the 2015 General Assembly. The Working Group terminates upon the convening of the 2015 General Assembly or the filing of its final report, whichever occurs first.

    Except as otherwise indicated, this act is effective when it becomes law.

    Makes conforming changes totheact's long title.


  • Summary date: Jun 16 2014 - More information

    The Senate amendment #2 to the 3rd edition makes a technical correction. 


  • Summary date: Jun 12 2014 - More information

    Senate amendment makes the following changes to the 2nd edition. Makes technical changes to the structure of the bill renumbering and re-lettering bill sections. Makes clarifying changes to GS 7A-45.4(a)(3) regarding disputes involving antitrust or unfair competition law. Also makes clarifying changes to GS 7A-45.4(a)(5) to provide that any party may designate as a mandatory complex business case an action that involves a material issue related to disputes involving the ownership, use, licensing, lease, installation, or performance of intellectual property, including computer software, data and data security, pharmaceuticals, biotechnology products, and bioscience technologies.

    Amends the definitions for (1)constituent corporation, (2)holding company, and (3)surviving entityto clarify that each term means a corporation incorporated under the laws of North Carolina or a limited-liability company organized under the laws of this state (was, means a corporation incorporated or organized in this state).

    Makes a technical correction to GS 7A-27, removing subsection (c).

    Amends GS 105-241.17 to provide that a taxpayer bringing a civil action challenging a tax statute as unconstitutional must follow the procedures in GS 1-267.1 [was, must follow the procedures for a mandatory business case as provided in GS 7A-45.4(b) through (f)].


  • Summary date: Jun 11 2014 - More information

    The Senate committee substitute to the 1st edition makes the following changes.

    Amends GS 7A-27(a) to provide that an appeal lies of right lies directly to the North Carolina Supreme Court (Supreme Court) from any interlocutory order of a Business Court Judge which does any of the following: (1) affects a substantial right, (2) in effect determines the action and prevents a judgment from which an appeal might be taken, (3) discontinues the action, and (4) grants or refuses a new trial. Requires appeals under new subdivisions (2), mandatory complex business cases, and (3), interlocutory orders, to GS 7A-27(a) to be made in accordance with the North Carolina Rules of Appellate Procedure applicable to civil cases. Applies to actions designated as mandatory complex business cases on or after October 1, 2014.

    Amends GS 7A-45.3 to direct the presiding Business Court Judge to issue a written opinion in connection with any order granting or denying a motion under GS 1A-1, Rule 12, 56, 59, or 60, or any order finally disposing of a complex business case.

    Amends GS 7A-45.4 regarding the designation of an action as a complex business case to permit any party to designate an action involving a material issue related to certain controversies as a mandatory complex business case. Makes clarifying changes in identifying an action that may be designated as a mandatory complex business case. Adds as a condition which must be met in contract disputes that all the parties must consent to the designation as a mandatory complex business case. Deletes requirement that a civil action under GS 105-241.17 be designated as a mandatory complex business case by the petitioner or the plaintiff. Applies to actions commenced or petitions filed on or after October 1, 2014.

    Amends GS 7A-45.4(e) to provide that if a party files an opposition to the designation as a mandatory complex business case within 30 days of the Notice of Designation, the opposition must state all the grounds on which the opposing party objects to the designation and any grounds not asserted will be deemed conclusively waived. Also provides that within 30 days after an order is entered staying a pending action under subsection (g) of this section, which provides that the Superior Court is to stay an action required to be designated but has not been until is designated as a mandatory complex business case, any party opposing the stay must file the objection with the Business Court stating all the grounds for the objection. Provides that any grounds not asserted are to be deemed conclusively waived. Provides that a party disagreeing with the decision may appeal in accordance with GS 7A-27(a) (was, appeal to the Chief Justice of the Supreme Court). Applies to actions commenced or petitions filed on or after October 1, 2014.

    Amends GS 7A-45.4(c) to delete the option of sending a copy of the Notice of Designation by fax. Applies to actions commenced or petitions filed on or after October 1, 2014.

    Amends subsection (g) to require the party designating the action as a mandatory complex business case to pay the filing fee required under GS 7A-305(a)(2). Applies to actions commenced or petitions filed on or after October 1, 2014.

    Provides that nothing in this section is intended to permit actions for personal injury cases grounded in tort to be designated as mandatory complex business cases. Applies to actions commenced or petitions filed on or after October 1, 2014.

    Enacts new GS 55-11-11, Merger to effect a holding company reorganization. Sets out six terms and definitions to be used in this section, including company official, holding company, and surviving entity. Provides that, unless expressly required by articles of incorporation, no vote by the shareholders is required to authorize a merger with or into a single direct or indirect wholly owned subsidiary of the constituent corporation if eight specified conditions are satisfied, including that the constituent corporation and the direct/indirect wholly owned subsidiary of the constituent corporation are the only constituent entities to the merger, and the directors of the constituent corporation become or remain the directors of the holding company upon the effective time of the merger. Provides that if the organizational documents of the surviving entity do not contain certain, specified provisions as outlined in the act, then the organizational documents must be amended in the merger to contain the specified provisions. Allows organizational documents to be amended in the merger to reduce the number of classes and shares of capital stock or other equity interests. Effective August 1, 2014.

    Provides that no provision of this act or provision found in an entity’s organizational documents can be deemed or construed to require approval of the shareholders of the holding company to elect or remove directors/managers/managing members of the governing body of the surviving entity.  Sets out three provisions which apply from and after the effective time of a merger adopted by a constituent corporation by its board of directors and without a vote of shareholders, including that to the extent a shareholder of the corporation, immediately prior to the merger, had standing to institute or maintain derivative litigation on behalf of the constituent corporation, than nothing in this act limits or extinguishes that standing. Effective August 1, 2014.

    Sets out certain requirements for certifying a plan of merger pursuant to these provisions. Requires the secretary or assistant secretary to certify the plan of merger. Provides that no certification is required if a certificate of merger or consolidation is registered in lieu of filing the plan of merger. Requires plans to be filed in order to become effective. Effective August 1, 2014.

    Amends GS 55-11-06, concerning the effect of merger or share exchange, updating statutory references.  Effective August 1, 2014.

    Amends Article 26A of GS Chapter 1. Rewrites the title of Article 26A as Three-Judge Panel for Redistricting Challenges and for Certain Challenges to State Laws (was, Three-Judge Panel for Redistricting Challenges).

    Adds new subsections to GS 1-267.1 to provide that except as provided in subsection (a) of this section, any challenge to the validity on its face of an act of the General Assembly must be transferred under GS 1A-1, Rule 42(b)(4), to Wake County Superior Court (Court) to be heard and determined by a three-judge panel of the Court, organized as prescribed by subsection (b2) of this section. Requires the Chief Justice of the Supreme Court to appoint three resident superior court judges to a three-judge panel of the Superior Court of Wake County to hear challenges to the validity of an act of the General Assembly on its face. Specifies the organizational structure of the three-judge panel, including the requirement for representation of different regions of the state and replacing members as necessary. Prohibits entering an order or judgment based on a finding that an act of the General Assembly is facially invalid based upon either the North Carolina or United States Constitution except by this three-judge panel. Provides that this section applies only to civil proceedings, and nothing in this section is to be construed as applying to a defendant in a criminal proceeding or to proceedings in which GS Chapter 15A is applicable.

    Amends GS 1-81.1 to provide that in an action seeking injunctive relief to stay enforcement, operation, or execution of an act of the General Assembly based on an allegation that the act is unconstitutional on its face under the US or NC constitution, venue lies exclusively with the Wake County Superior Court. Makes conforming changes to GS 1A-1, Rule 42, Consolidation; separate trials.

    Amends GS 1A-1, Rule 62, adding a new subsection (h) to clarify that where a trial court grants injunctive or declaratory relief restraining the enforcement or execution of an act of the General Assembly against a party in a civil action, the trial court shall stay the relief granted pending appeal. Provides that this subsection only applies when the state or a political subdivision of the state is a party in the civil action. Declares that this subsection does not apply to facial challenges heard by a three-judge panel under GS 1-267.1.

    Amends GS 7A-27 to provide that an appeal lies of right directly to the Supreme Court from any order or judgment of a court, either final or interlocutory, that holds that an act of the General Assembly based on the US or NC constitution is unconstitutional on its face. Makes a conforming change to GS 7A-27.  

    The provisions on the 3-judge panel are effective on July 1, 2014, and apply to any claim filed on or after that date.


  • Summary date: May 27 2014 - More information

    Amends GS 7A-27(a) regarding appeals of right from trial division courts to expand the cases in which the appeal by right lies directly with the Supreme Court to include any final judgment in a case (1) designated as a mandatory complex business case under GS 7A-45.4, or (2) designated as a discretionary complex business case under Rule 2.1 of the General Rules of Practice for the Superior and District Courts. Applies to appeals filed on or after October 1, 2014.

    Amends GS 7A-45.3 to require a presiding Business Court Judge to issue a written opinion upon on the final disposition of a complex business case.

    Amends GS 7A-45.4 regarding the designation of an action as a complex business case. Permits any party to designate an action as a mandatory complex business case when the action involves a material issue related to: (1) disputes arising under the following chapters of the General Statutes-55, 55A, 55B, 57D, and 59 concerning partnerships, limited liability companies, and corporations but excludes charitable and religious organizations qualified under GS 55A-1-40(4) on the grounds of religious purposes; (2) disputes involving securities law arising under GS Chapter 78A; (3) disputes involving an antitrust or unfair competition law arising under common law or GS Chapter 75; (4) disputes involving trademark law arising under GS Chapter 80; (5) disputes involving trade secrets under Article 24 of GS Chapter 66; and (6) certain contract disputes in which all of the specified conditions are met including that the amount in controversy is computed as at least $1 million. Applies to petitions filed or actions commenced on or after October 1, 2014.

    Requires that the following actions must be designated as mandatory complex business cases: (1) an action involving a material issue related to tax law that has been the subject of a contested tax case for which judicial review is requested under GS 105-241.16 or that is a civil action under GS 105-241.17; (2) an action described in subsection (a) of GS 7A-45.4 in which the amount in controversy computed in accordance with GS 7A-243 is at least $5 million; and (3) an action brought pursuant to GS 62-350, whichinvolves regulation of pole attachments. Applies to actions commenced or petitions filed on or after October 1, 2014. Applies to actions commenced or petitions filed on or after October 1, 2014.

    Requires the party designating an action as a mandatory complex business case to file a Notice of Designation in the Superior Court in which the action has been filed and to at the same time serve notice on each opposing party or counsel and ontheSuperior Court Judge for Complex Business Cases. Additionally requires contemporaneous transmission of the notice by e-mail or fax to the Chief Justice of the Supreme Court for approval of the designation as a mandatory complex business case and assignment to a specific Business Court Judge. Provides that failing to designate an action as a mandatory complex business case when it is required to be designated as such under subsection (b) of this section, requires the Superior Court in which the action has been filed to either dismiss the action without prejudice or stay the action until it has been properlydesignatedas a mandatory complex business caseunder this section. Applies to actions commenced or petitions filed on or after October 1, 2014.

    Amends GS 7A-305(a)(2) to increase the filing fee for complex business cases to $1,100 (was, $1,000). Also provides that if a court on its own motion assigns a case to a special superior court judge as a complex business case under GS 7A-45.3, the plaintiff is required to pay an additional $1,100 (was, $1,000) for support of the General Court of Justice.Applies to actions commenced or petitions filed on or after October 1, 2014.

    Amends GS 7A-343 to expand the duties of the Director, who is the Administrative Officer of the Courts, to include a requirement that the Director prepare and submit a semiannual report on the activities of each North Carolina business court site to the Chief Justice and to eachmemberof the General Assembly. Provides specifications as to the content and scope of this report and declares it to be separate from the report currently required under subdivision (8) of this section.

    Except as otherwise indicated, this act is effective when it becomes law.


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