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Law Expands Supreme Court Jurisdiction to Include Direct Appeals in Business Court Cases and from Orders Invalidating Acts of the General Assembly

The workload of the Supreme Court of North Carolina just increased substantially.  The governor’s office announced yesterday that he had signed Senate Bill 853, which strengthens our State’s flagship business courts and provides business court litigants direct appellate access to the Supreme Court.

As we noted before, the new law reworks N.C. Gen. Stat. 7A-27 to redirect appeals of business court decisions from the Court of Appeals to the Supreme Court.  The statute applies not just to final judgments, but to immediately appealable interlocutory orders as well.  In short, if you want to appeal a business court decision, you now take that appeal directly to the Supreme Court.

This law marks a seismic change to the jurisdiction of our Supreme Court.  Think about the ramifications:

  • More Oral Arguments.  The Court of Appeals can, and often does, decide appeals on the briefs under Appellate Rule 30(f).  The Supreme Court almost always entertains oral arguments in every appeal it hears.  Unless the Supreme Court starts exercising its dormant authority to decide appeals on the briefs (see Appellate Rule 30(f)(1)), we can expect every business court appeal to be heard orally by all seven Justices of the Supreme Court.
  • More Business Law Precedents.  The Court of Appeals often decides cases by way of unpublished, non-precedential opinions.  The Rule allowing unpublished opinions, however, does not apply to the Supreme Court.  As such, every decision in a business court appeal will be precedential.  This is great news for commercial litigators and for business in general, as the law in our state will become more predictable and established on the issues that matter in the business world.
  • Increase in Business Court Stature.  The Court of Appeals has famously declared that the business court is just like any other superior court, and that its decisions are not to be accorded precedential value.  But the business court has prided itself on its ability to produce detailed and reasoned opinions to provide guidance to businesses going forward and a firm basis for appellate review.  (The requirement for reasoned opinions was buried in Rule 2.1(b) of the General Rules of Practice, and applied only to final decisions.  Under the new law, the requirement is now found in the statute and applies to any ruling made under Rules 12, 56, 59, or 60.)  The new law sends a clear message that the business court, though certainly still a trial court, has enough of the attributes of an appellate court (e.g., law clerks, reasoned opinions) to warrant direct review of its decisions by the Supreme Court.

The law also expands the jurisdiction and workload of the business court:

  • “Amount in Controversy Jurisdiction.  As federal practitioners know, a case involving only state law issues can end up in federal court if the amount in controversy exceeds $75,000 (and there is complete diversity).  The new law works a similar expansion to business court jurisdiction, allowing business parties with unanimous consent to have the business court hear their contract dispute if the amount in controversy is at least $1 million.
  • Exclusive Jurisdiction for High Dollar Cases. Most of the business court’s docket has, to date, consisted of cases arising under its concurrent jurisdiction with the other superior courts.  That is, if the parties wanted their case to proceed in superior court, they generally could.  Now, however, a “mandatory complex business case” worth more than $5 million must be brought in business court (joining certain tax disputes and utility pole cases that already lie in the business court’s exclusive jurisdiction).

What other effects do you think this new law will have?  Is there a policy reason why we would not want high dollar cases afforded mandatory access to the business court and direct access to the Supreme Court for appeals, while lower dollar cases follow the traditional path?  Or does this law simply take another laudable step in the direction of providing predictability for businesses as they make decisions with potential legal consequences?

The new law takes effect October 1, 2014, and will impact only those cases entering business court on or after that date.  In other words, the Supreme Court can reasonably take most or all of the 2014-2015 term to consider the impact of the new law before it is likely to hear the first direct appeal from the business court.

Orders Striking Down State Statutes Are Also Now Directly Appealable to the Supreme Court

In addition, the budget bill signed by the governor this week added subsection (a1) to N.C. Gen. Stat. 7A-27, which will provide for direct appeal to the Supreme Court from any order invalidating an act of the General Assembly on the basis of constitutional or federal law.  This statute goes hand-in-hand with the new three-judge trial-level panels that will hear cases mounting a facial challenge to an act of the General Assembly.  These changes take effect immediately and apply to any new cases or pleadings.

–Matt Leerberg

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https://www.ncapb.com/2014/08/08/law-expands-supreme-court-jurisdiction-to-include-direct-appeals-in-business-court-cases-and-from-orders-invalidating-acts-of-the-general-assembly/
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