Original jurisdiction: how NC's Business Court became a model of its own.

Author:Doerr, Adam
Position::Law Journal 2015 - North Carolina
 
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The Delaware Chancery Court proclaims its "unique competence in and exposure to issues of business law," and justifiably so, as the court tasked with deciding many of the largest corporate law disputes in the United States. In addition to making it a model for business courts in other states, including North Carolina, the Chancery Court's distinguished reputation has earned it a starring role in Delaware's efforts to market itself as a location for business incorporation. Those efforts have been extraordinarily successful--nearly two-thirds of Fortune 500 companies are incorporated in Delaware, and the state formed 169,000 new business entities in 2014. In fact, the number of Delaware corporations and LLCs now exceeds the state's human population.

But when it comes to business, not incorporations, the story is different. Only two Fortune 500 companies are headquartered in Delaware, less than half the number headquartered in Nebraska or Arkansas. North Carolina has more than a dozen. Given the fact that North Carolina's population is about 10 times larger than Delaware's, such direct comparisons are relatively meaningless. Rather, the point is that incorporations and business are two very different things. The Chancery Court's reputation developed from its expertise in resolving disputes relating to companies incorporated in Delaware. Its biggest cases, from takeover battles in the 1980s to litigation over the hiring and firing of Disney executives, did not involve any business activity in Delaware. Most cases in the Chancery Court are there because the companies involved were incorporated in Delaware, not because they do business there.

The North Carolina Business Court plays a similar role in deciding cases involving the internal affairs of companies incorporated in North Carolina. But equally important--and somewhat in contrast to the Chancery Court --the Business Court handles numerous disputes arising from businesses that operate in North Carolina. Indeed, when it comes to providing a court able to resolve contract, trade secret and other major business litigation, it is North Carolina that has become a national model.

In 1994, Gov. James B. Hunt created the North Carolina Commission on Business Laws and the Economy to make recommendations to improve the state's business climate. The commission's 1995 report recommended the creation of a business court. The commission viewed this as an opportunity for North Carolina: despite the success of the Chancery Court, no other state had worked to emulate its responsiveness and predictability. In 1995, the legislature added the funds for an additional state Superior Court judge, which was the beginning of the Business Court.

The Court's first judge, Benjamin Tennille, was appointed in January 1996 to a court with no office, no staff and no budget. He spent years building the Court's reputation and developing its infrastructure, including court rules, staff and an electronic filing system. In 2006, the Court added two new judgeships. The current Court is comprised of Chief Judge James L. Gale in Greensboro, Judge Louis Bledsoe in Charlotte and Judge Gregory McGuire in Raleigh. Each has a dedicated chambers and staff, including law clerks, as well as courtrooms equipped with advanced technology. Gov. Pat McCrory recently appointed Winston-Salem attorney Michael Robinson to fill a fourth seat, pending confirmation by the legislature, and a fifth judge has been authorized.

In 2014, the legislature expanded the Court's docket. With these...

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