Business Court Modernization Snowball Gathers Politics But Keeps Moving

by Womble Carlyle Sandridge & Rice, LLP
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A new version of SB 853 was approved today by a Senate Judiciary Committee; and it addresses two new items. The title was amended to include the new sections: 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 Constitution. 

The new version is here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S853v2.pdf

Senator Barringer presented the bill to the committee with input from her co-sponsor Senator Rucho. Barringer said the goal of the bill was to add clarity and predictability to NC's Business Court with the new jurisdictions modeled somewhat after the Delaware Court of Chancery; the new section on holding companies is modeled after Delaware's law and is intended to make NC more competitive by offering flexibility in how companies incorporate themselves within our state. She also said that stakeholder suggestions had been incorporated into the committee substitute, including those from the NC Chamber, the NC Association of Defense Attorneys, Advocates for Justice, the Administrative Office of the Courts, and Professors Tom Hazen and John Coyle from the UNC School of Law.

Senator Rucho added his now-familiar mantra that he plans "to make NC the leading economy in the U.S." He invited Judge Jolly, who presides in business court in Raleigh, to the committee hearing today but he wasn't able to make it. Rucho said the long term plan is to add 2 more judges. (It's not often that we get quality and quantity!)

Now for political intrigue: Section 7 is new to this bill but not new to legislative watchers. It provides that in the event an action of the General Assembly--- not just redistricting -- is challenged as unconstitutional the Chief Justice of the Supreme Court would appoint a 3-judge panel in Wake County to handle the claim, the bill then makes conforming changes to Rule 42 and Rule 62.

Some Democratic committee members suggested this was partisan politics and shouldn't be included but Committee Chair Sen. Buck Newton said this section would be enacted law by adjournment. In a belt-and-suspenders approach, this is the third time this language has appeared in a Senate bill this session.
 
The committee approved the bill with one dissenting vote; Senator Blue suggested that all this new jurisdiction should include new funding. The bill was calendared for full Senate action June 16th. It's still unclear the House is interested in the bill this summer, and today they had tunnel vision on the budget.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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