BLOGS: Keeping Up With Jones Street

Friday, June 27, 2014, 2:02 PM

Bill Updates that will make your head spin - weekly wrap-up.

Patent Trolling

The contents of HB 1032 - Patent Trolling have been added to SB 648 - NC Commerce Protection Act and sent to the Senate for a concurrence vote. The new SB 648 now addresses contracts between the NC Attorney General and private lawyers as well as patent trolling. View the bill here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S648v6.pdf. HB 1032 remains "parked" in the Senate Rules Committee.

Mechanics Liens

Remember that HB 1101 and 1102 made changes to the Mechanics Liens statute. In Senate committee this week HB 1101 which provided protections to those making improvements on leased real property was amended to deal with child custody and deploying military parents. The new bill is here: http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1101v3.pdf. HB 1102 dealing with lien agent notice remains unchanged. You can see the bill here: http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1102v1.pdf.

New Public Private Partnership to handle State's Economic Development

HB 1031 is now law! The bill that moves many former Department of Commerce functions related to economic development and attracting new jobs to the state has been moved to an affiliated PPP requiring 8 new regional zones to provide substantial match money with plenty of oversight from Raleigh. The enacted bill is here: http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1031v6.pdf

Statute of Repose

Shortly after the US Supreme Court ruled in CTS Corp. v. Waldburger, a case dealing with liability in groundwater contamination, a House Judiciary Committee took SB 574, dealing with bail bonds, and replaced the contents with a proposed law change on the Statute of Repose. The new version appeared in committee as a Proposed Committee Substitute which is technically an amendment and was adopted as such. The Committee Substitute, which passed the House without dissent, and which the Senate unanimously concurred in, rewrites G.S. 130A-26.3, regarding time period limitations for groundwater contamination legal actions and provides that the 10-year period set out in GS 1-52(a)(16) will not bar an action for personal injury or property damage caused by the consumption, exposure, or use of groundwater contaminated by a hazardous substance. The claimant's exposure to the contaminated groundwater must have occurred on or before June 19, 2013. That bill was enacted into law last Friday. This week that new law (Session Law 2014-17) was modified by SB 58 - Modify Statute of Repose (formerly a bill about shallow inlet dredging) which makes 3 clarifying changes to the Statute of Repose. SB 58 has been ratified and awaits the Governor's signature.

The new law on Statute of Repose is here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S574v6.pdf
The bill clarifying the new law is here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S58v5.pdf

Business Court Modernization

This week we saw committee action of SB 853 - Business Court Modernization. A House Judiciary Committee unveiled a new version of the bill that was prepared without input from bill sponsors Barringer and Rucho. This is common treatment of a senate bill in a house committee or vice versa; it is also a sign that the session is winding down.

Senator Barringer presented the bill and listed the ever-growing list of the interested parties who have now weighed in, this time adding to the list Mack Sperling whose business litigation blog is well-regarded and can be seen here: http://www.ncbusinesslitigationreport.com/. Barringer was gracious as she learned the new version of the bill had stripped out two sections of her bill that the Senate supports: the 3-judge panel for constitutional challenges and the Delaware-style business incorporation language, leaving only the section dealing specifically with the state's Business Court with some small technical and conforming changes.

Mildred Spearmen from the Administrative Office of the Courts addressed concerns to the committee including an unaddressed potential cost to the Judicial Branch, technical concerns about how some cases are transferred, and what happens if Business Court designation triggers are not met at the filing of the case.

The committee is scheduled to review the bill again next Monday. The committee PCS was not adopted and so is not official but you can get a peek here:  http://www.wcsr.com/resources/pdfs/S853CSRNF57.pdf

Amending the Practice of Law
(Shout out to Womble's Scott Schaff for highlighting this bill this week.)
 
On Thursday the Senate Judiciary I committee approved a bill that amends Chapter 84-2.1 regarding the practive of law. Chairman Goolsby proposed the new language which creates a safe haven for Legal Zoom and like companies by removing what they do from the definition of the "practice of law".  

What happened and how:  In 2013, House Bill 663 - Commodities Producer Protection - was introduced, passed the House and was referred to the Senate Judiciary I Committee. Until yesterday its last action was May 20, 2013. Thursday a PCS was rolled out that replaced the contents of the bill with an amended definition of the "practice of law" designed to provide a safe haven for companies like Legal Zoom to provide what we consider legal service in NC. As of Friday, the new Legal Zoom version of the bill still has not been "reported out of the committee" or added to the Senate's calendar for Monday. However, both of these things can happen next Monday evening if the Senate Leadership wants it.

What is the bill now:  The new bill was summarized as: “The PCS completely rewrites the bill and would exempt from the statutory definition of “practice law” certain self-help legal written materials bearing a disclaimer that they are not a substitute for the advice of an attorney."

What will happen next:  We predict we have a week or so left in this session, and things (and people) are getting a bit unpredictable and illogical so we checked in with some of the lawyers who serve in the House Leadership.  At this point we haven't found a single one who expects they will concur with the Senate changes to the bill. Without the House concurrence the bill cannot be enacted.  The season of legislative hostage-taking is upon us so this may become trade bait and thus is still a danger. We are making additional calls on this bill today and have nothing new to scare you with.

HB 663 - Legal Zoom tries to get a safe toehold in NC


Shout out to Womble's Scott Schaff for highlighting this bill this week:
 
Amending the Practice of Law
 
On Thursday the Senate Judiciary I committee approved a bill that amends Chapter 84-2.1 regarding the practive of law. Chairman Goolsby proposed the new language which creates a safe haven for Legal Zoom and like companies by removing what they do from the definition of the "practice of law".  

What happened and how:  In 2013, House Bill 663 - Commodities Producer Protection - was introduced, passed the House and was referred to the Senate Judiciary I Committee. Until today its last action was May 20, 2013. Today the contents of the bill were stripped out and replaced with the language Scott shared below in what is called a “Proposed Committee Substitute”. The committee room was jammed and there was strong audience opposition to the bill exactly along the lines Scott reports.  As of tonight, the new Legal Zoom version of the bill has not been "reported out of the committee" - which means the new version of the bill is not yet official and cannot be located on the General Assembly’s website. It also means the bill does not appear on the Senate’s calendar for Monday night.  However, both of these things can happen next Monday evening if the Senate Leadership wants it.

What is the bill now:  The new bill was summarized as: “The PCS completely rewrites the bill and would exempt from the statutory definition of “practice law” certain self-help legal written materials bearing a disclaimer that they are not a substitute for the advice of an attorney."

What will happen next:  We predict we have a week or so left in this session, and things (and people) are getting a bit unpredictable and illogical so we checked in with some of the lawyers who serve in the House Leadership.  At this point we haven't found a single one who expects they will concur with the Senate changes to the bill. Without the House concurrence the bill cannot be enacted.  The season of legislative hostage-taking is upon us so this may become trade bait and thus is still a danger. We will keep an eye on it for you.

 

Interesting Alliances, or not, in State Budget Negotiations


This week the House, in close collaboration with the Governor's Office, rolled out a "mini budget" bill that addressed some of the larger chunks of state spending and softened the House approach somewhat. The Senate balked, in part because they don't appreciate Governor McCrory's Budget Director, Art Pope and the House working as a team.

But Art Pope is a House man....

For those of you who haven't been watching Jones Street closely for the last 2 decades you may be surprised to learn that State Budget Director Art Pope and Former Representative Art Pope are one and the same! Art Pope filled the seat vacated by Chuck Neely when Neely decided to run for the Republican nomination for Governor in 2000, losing in a crowded field to Richard Vinroot. Pope decided not to seek re-election and Don Munford won that district. Don Munford later lost to Grier Martin. 2010 redistricting made a new downtown Raleigh district that put close friends and incumbents Grier Martin and Deborah Ross together in the same district so Martin decided not to run. Ross won re-election but later resigned for a job in the private sector, and Martin was appointed to fill the seat. So Grier Martin is Art Pope's legislator.

The Senate was not pleased to see the latest draft of Senate Bill 3 - 2014 Budget Modifications, Pay Raises and Other Changes which is the mini budget. You can view it here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S3v3.pdf.

State Government Shut Down Looming on July 1st? Nah.

Most of you are aware that the fiscal year for states runs July1st to June 30th. Our prediction here in NC is that next Monday will become next Tuesday with no new budget. Will this lead to a state government shutdown? It will not and here's why:

In odd numbered years North Carolina enacts a biennial budget. In even numbered years the state budget is simply an adjustment to the existing state budget. So July 1st can come and go with no sky falling, and the legislative game of "chicken" can continue. The budget enacted last year will continue until June 30th of 2015. But that's not a perfect scenario.

It is important that the budget be adjusted in these even years for several reasons:
  • there need to be measures to address Medicaid cost overruns;
  • an opportunity to adjust predictions on the number of school children to expect;
  • pay raises for teachers, state employees and a COLA for state retirees; and
  • some state match to federal grant dollars must be appropriated each year.
Next we'll talk about what's happening with current budget negotiations.....

Wednesday, June 25, 2014, 7:45 PM

Business Court Modernization Bill Stuck in House Committee

Today a House Judiciary Committee was presented with a new version of SB 853 - Business Court Modernization - that was prepared without input from bill sponsors Barringer and Rucho. This is common treatment of a senate bill in a house committee or vice versa; it is also a sign from above that the session is winding down.

Chairman Chuck McGrady provided guidelines for discussing and changing the bill without a vote scheduled for today's committee meeting.

Senator Barringer presented the bill and listed the ever-growing list of the interested parties who have now weighed in, this time adding to the list Mack Sperling whose business litigation blog is well-regarded and can be seen here: http://www.ncbusinesslitigationreport.com/. Barringer was gracious as she learned the new version of the bill had stripped out two sections of her bill that the Senate supports: the 3-judge panel for constitutional challenges and the Delaware-style business incorporation language, leaving only the section dealing specifically with the state's Business Court with some small technical and conforming changes.

Mildred Spearmen from the Administrative Office of the Courts addressed concerns to the committee including an unaddressed potential cost to the Judicial Branch, technical concerns about how some cases are transferred, and what happens if Business Court designation triggers are not met at the filing of the case.

The chairman told the committee member they may have the opportunity to further debate and vote this bill out at a future committee meeting.  That's right they may at a future meeting. This bill may be a hostage in the semi-friendly end-of-session wrap-up games.

Our best guess is we see the passing of a bill to modernize the Business Court this session. No guarantees on the provisions regarding the 3-judge panel or the Delaware-style business incorporation changes.

The new version of the bill is here:  http://www.wcsr.com/resources/pdfs/S853CSRNF57.pdf


 

Friday, June 20, 2014, 11:11 AM

No Legislative Denouement Yet.....

This week at the General Assembly was full of the hints that the Honorables were ready to wrap things up without actually wrapping things up.

Critical to predicting 2014 legislative adjournment will be the ability of the House and Senate to compromise on the $21 Billion spending plan, and how to address the Common Core Curriculum in our schools. And there is no harmony there. Yet.

A few notable things happened at break neck speed.....

The House Elections Committee passed a bill to allow dead people to vote. Well, sort of.  Earlier this year Republican U.S. Senate Primary Candidate Mark Harris' father cast an early vote by absentee ballot -- legally -- but then passed away before May 6th which was the Primary Election Day. The committee passed HB 1267 - Absentee Ballot/Everette Harris Act  http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1267v1.pdf. The deceased Mr. Harris' vote was challenged and the House has responded with this bill. This bill would also be important for our absentee voters who are overseas military personnel. It is scheduled for full House consideration on Tuesday.

There is a lot of interest in this one. SB 574 - Statute of Repose http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S574v5.pdf which we blogged on earlier in the week has been ratified and sent to the Governor. This act is a reaction to the Supreme Court decision in CTS Corp v. Waldburger. The bill clarifies that existing law regarding time periods for lawsuits over liability was intended to address products, and it sets a new standard for this environmental contamination. The bill language was amended into a Senate Bill (formerly dealing with bail bonds) in a House committee, passed unanimously on the House floor, sent to the Senate for concurrence, referred to a Senate committee to review the changes, then the full Senate concurred without dissent. The bill was ratified and sent to the Governor. We expect the Governor to sign the bill. [**Note: If the Governor were to veto the bill it would be sent back to the Senate, then House, for an override vote. It would need the votes of 3/5 of the members in each chamber -- which is an easy threshold for a bill with unanimous support so far. If the Senate and House voted to override the act would "become law over the objection of the Governor".] ***We do not expect a veto but thought we'd slip that civics lesson in... We'll let you know when the Governor signs the bill.

The Senate response to the coal ash pond breach that impacted the Dan River has been swift and strong. SB 729 - Coal Ash Management Act of 2014: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S729v2.pdf, is aimed at the safe and quick closure of coal ash ponds at electric power generating plants - really at Duke Energy. The 44-page bill establishes a timeline for evaluating, ranking and closing the 33 coal ash ponds in NC and specifies 4 that are the highest risk. It requires that Duke pay a new fee that will generate $1.75 million a year to fund positions at DENR to oversee this process and prohibits Duke from recovering those costs through a rate case. This is all unusual in my years of legislature-watching. The bill will be on the Senate calendar Tuesday.

Common Core Curriculum Standards in Education. The House and Senate are both dissatisfied with Common Core and seek to replace it. The Senate bill creates a commission to evaluate standards and put together the best possible plan for our schools; it may include part of Common Core if that's what their research supports. The Senate bill passed the Senate and was debated in the House Education Committee yesterday. The Senate bill author, Sen. Jerry Tillman, was surprised to see that the contents of his SB 812 had been stripped out and replaced with the House language. The House version also forms a commission but prohibits any part of Common Core being included in new standards. This parliamentary trick was unwelcome by the bill sponsor and may impede ultimate compromise on a bill.

For your interest we've included SB 812 in the form it passed the Senate: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S812v3.pdf

And the new language for SB 812 which mirrors HB 1061. (We're just using HB 1061 for this comparison. The new senate bill will be available soon): http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1061v3.pdf. This is the language that passed the House Education Committee yesterday.

House Judiciary Chairman Leo Daughtry has referred SB 853 - Business Court Modernization http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S853v4.pdf to a standing subcommittee and expects the bill to have a hearing next week.

Some tweaks to last session's unemployment insurance reform law has passed both chambers and awaits ratification. House Bill 1069 is here; http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1069v3.pdf. The bill was presently primarily as ensuring compliance with federal law and is the result of an interim study committee recommendation. There continues to be some partisan division in this area.

The Medicaid Plan Trifecta: We have now seen House and Senate Medicaid plans as well as the Governor's. There is no way I can explain this better than WRAL's Mark Binker. Have a look here for details: http://www.wral.com/medicaid-funding-reform-efforts-continue-to-divide-house-senate/13749033/.

Up next week: everything. Get some rest over the weekend. Have plenty of coffee for the week. Skip the high heels.





Wednesday, June 18, 2014, 11:55 PM

Statute of Repose Agreed to by House and Senate


The Senate unanimously concurred in the House Committee Substitute for Senate Bill 574 after a Senate committee briefly reviewed the new bill today. You'll remember that the House changed the bill from one making technical changes regarding bail bonds to one addressing a recent US Supreme Court decision on groundwater contamination through a "delete and replace all the bill contents" amendment called a proposed committee substitute.

During the Senate floor debate we learned that the impacted statute was designed with products in mind and not environmental contamination making the soon-to-be law more of a clarification than a brand new idea.

The Governor signed the bill Friday afternoon. The new law is here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S574v6.pdf.

And that new law was further clarified with this new bill: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S58v6.pdf

House Judiciary Chair Intends to Act on Business Court Modernization Bill

Judiciary Committee Chairman Leo Daughtry has interest in considering SB 853 - Business Court Modernization, and has assigned it to Standing Subcommittee Judiciary C. Chairman Daughtry told me that he prefers to add two judges to the Business Court which may be part of the budget conference discussions. House Judiciary C normally meets Wednesdays at 10:00.  We'll keep you informed.

Monday, June 16, 2014, 9:09 PM

Business Court Modernization bill passed the Senate

SB 853 - Business Court Modernization passed the Senate tonight with one technical amendment and no debate. We'll be asking around to see if the House will take this bill up. Stay tuned.....

Coal Ashy Afternoon in a Senate Committee (SB 729)

This afternoon the Senate Committee on Agriculture, Environment and Natural Resources met to debate its version of the Governor's Coal Ash Plan -- which is now titled the Coal Ash Management Act of 2014 and is definitely the Senate's.

The new bill is a 44-page list of expensive identification, monitoring and remediating requirements for the NC electric utilities that have the 14 coal ash ponds, and requires immediate closure of 4 of them while requiring extensive monitoring and inspections of all of them in the years leading up to their eventual closure. The bill then requires lots of testing, research and reporting going forward. It provides for conversion to fly ash or closure -- by 2029 for the lowest risk impoundments.

The bill starts off with a sledgehammer: it prohibits the Utilities Commission from allowing a regulated utility that has a coal ash impoundment discharge from recovering those costs from retail customers unless the Commission determines the discharge to be the result of an "event of force majeure".  That moratorium remains in effect at least until the State studies the disposition of impoundments as well as adoption of final rules on coal combustion residuals by U.S. EPA.

With particularity the bill requires the assessment, ranking and closure of ponds with coal combustion residuals into three classifications: Low-Risk, Intermediate-Risk and High-Risk impoundments. The bill identifies the following four as high-risk which expedites the timeline for closure even in relation to others that will eventually be deemed high-risk. They are:
  1. Dan River Steam Station, Rockingham County. Owned and operated by Duke Energy-Progress.
  2. Riverbend Steam Station, Gaston County. Owned and operated by Duke Energy Carolinas.
  3. Asheville Steam Electric Generating Plant, Buncombe County. Owned and operated by Duke Energy Progress.
  4. Sutton Plant, New Hanover County. Owned and operated by Duke Energy Progress. 
The bill establishes a Coal Ash Closure Commission that will be housed at the Department of Public Safety's Emergency Management Section but will be independent. This commission will approve the prioritization classification of impoundments; review closure plans for impoundments; make legislative recommendations regarding coal combustion residual; and provide expertise for studies etc. The bill also provides funds for 25 state positions using a newly imposed fee on the utility payable quarterly. (The fee is 0.03% of NC jurisdictional revenues of each public utility with a coal combustion residuals surface impoundment. It is expected to raise $1,750,000.) The fee is also not recoverable by rate case.

When it comes to electricity someone always pays, so who will it be -- the State, customers or shareholders? Just remember, when you flip on your light switch your lights come on. Every time.

Find the new version of SB 729 here: http://www.wral.com/asset/news/state/nccapitol/2014/06/15/13735977/coal_ash_bill.pdf

Will the Legislature have the final word on Groundwater Contamination? Looks that way.

Legislators are outmaneuvering School House Rock. Folks my age got a great civics lesson in how a bill becomes a law on Saturday mornings while eating sugary cereal in front of the tv. But a crucial element was missing from that lesson: the amendment. Remember that our constitution only requires that a bill pass each chamber in identical form; so if a Senate Bill gets changed before the House passes it, it returns to the Senate for concurrence in the House Committee Substitute. If the Senate concurs it's off to the Governor's desk.

In this case, on June 12th, a House Judiciary Committee took Senate Bill 574, dealing with bail bonds, and replaced the contents with a proposed law change on the Statute of Repose -- and title change -- that is in response to a recent US Supreme Court Case dealing with groundwater contamination. The new version appeared in committee as a Proposed Committee Substitute which is technically an amendment and was adopted as such. The Committee Substitute, which passed the House on Thursday without dissent, rewrites G.S. 130A-26.3, regarding time period limitations for groundwater contamination legal actions and provides that the 10-year period set out in GS 1-52(a)(16) will not bar an action for personal injury or property damage caused by the consumption, exposure, or use of groundwater contaminated by a hazardous substance. The claimant's exposure to the contaminated groundwater must have occurred on or before June 19, 2013. The case this relates to is mentioned in Section 1 of the bill: CTS Corp. v. Waldburger.

The bill was sent to the Senate by Special Message which means it may appear on tonight's Senate calendar for a concurrence vote without otherwise being noticed.

You can view the new version of SB 574 - An Act Clarifying That Certain Civil Actions Relating To Groundwater Contamination Are Not Subject To The Ten-Year Statute Of Repose Set Forth In G.S. 1-52 here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S574v4.pdf

Pull up your bowl of Lucky Charms and refresh your civics knowledge here: https://www.youtube.com/watch?v=Otbml6WIQPo

Friday, June 13, 2014, 10:48 AM

Weekly Update for June 9th

This week the Senate acted on several big matters, attended a funeral for Senator Harris Blake and perhaps ended up at the U.S. Open. The House was focused on its budget.

The House

As we wrap up the week the House is still debating its budget proposal and preparing for the final vote. Historically, when the budget debate goes late into the evening on 2nd Reading the members just stay past midnight and crank out a vote on 3rd Reading between midnight and 1:00 a.m.; the late hour naturally curtails repetitive debate. Then everyone leaves with that day's work done. That's what we were expecting last night -- you've never seen so many comfortable shoes in the workplace -- but the House wrapped up debate on 36 amendments and voted on 2nd Reading hours before midnight. So the Speaker just sent everyone home and came back for an early start Friday; the Members are rested and loquacious.

Notable efforts to amendment the House budget included rolling in:
  • the "Puppy Mill Bill" which is yet another bill regulating dog breeders and is supported by the Governor and is a main priority of the First Lady,
  •  replacing the state's film incentives with a grant program despite the industry's effort to simply extend the current credit program including, I am told, introductions to Robert Downey Jr.,
And fighting off:
  • an effort to defund the Opportunity Scholarship school vouchers (which survived a Court challenge defended by Womble's Bob Numbers),
  • the reinstatement of the earned income tax credit,
  • keeping the SBI in the Attorney General's Office.
The House and Senate Budgets are vastly different this year. The Budget Conference process which reconciles the differences will be unlike any in recent history -- and this casts doubt on our earlier prediction of adjournment by July 4th.
 
The Senate
 
The Senate got moving on its bill to modernize the Business Court. On Tuesday the bill was considered by the Senate Finance Committee which considered only the filing fee increase from $1,000 to $1,500 then moved the bill on to a Judiciary Committee for debate of it substantive sections.
 
A new version of SB 853 was presented to the Senate Judiciary Committee on Wednesday that added 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.

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. We saw this section as a provision in the Senate-passed budget last week.

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 the 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 bill was calendared for full Senate action June 16th. Still no word on whether the House will take up the bill, but the recent spadework by Rucho and Barringer have ginned up stakeholder interest.
 
Next Week

Next week the Senate takes up SB 729 - Governor's Coal Ash bill (here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S648v4.pdf). And the House will begin looking at SB 648 - NC Commerce Protection Act of 2014 (here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S648v4.pdf)
 

Wednesday, June 11, 2014, 6:49 PM

Business Court Modernization snowball gathers politics but keeps moving

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.

Tuesday, June 10, 2014, 5:54 PM

Bill to Modernize the Business Court Gets Action

Today the Senate took a look at SB 853 - An Act to Modernize the Business Court in the Senate Finance Committee. The jurisdiction of that committee was the filing fee increase from $1000 to $1100 which the committee approved on Senator Apodaca's motion without discussion. Freshman Senator Tamara Barringer presented the bill. The Senate Judiciary I Committee will take up the bill tomorrow to look at the substantive proposed changes. You can view the bill here: http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S853v1.pdf. The NC Chamber looks to be pushing this bill hard. We can't tell how engaged the Administrative Office of the Courts is in this matter.

Friday, June 6, 2014, 1:58 PM

Weekly Wrap Up for June 2

Promises kept: we're starting to see the General Assembly narrow its focus as they promised before this Short Session convened in May. House and Senate calendars are stacked with similar bills including committee work and floor debate on the same issues on the same days. I'm sticking with my prediction of adjournment before July 4th.

This week: Common Core, Budget, Economic Development, Mechanics Liens.

The Senate passed its version of the state budget in the wee hours of Saturday morning then rested until Wednesday. Wednesday and Thursday the Senate took up its version of Governor McCrory's new economic development structure SB 743 http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S743v4.pdf with a final Senate vote expected early next week. And it passed a bill to eliminate the educational standards known as Common Core - SB 812 http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S812v3.pdf.

The place to be Wednesday was the Senate Education Committee where business leaders and the education lobby watched the Senate dispense with common core standards and then take on the Office of Charter Schools regarding the process, problems and culture of evaluating applications for new charter schools. Laura Leslie's must-read-to-believe news account is here http://www.wral.com/senate-education-leader-blasts-charter-chief/13701705/.

The House has been putting together its version of the state budget which we hear will be very different from the Senate's -- which could lead to a long conference process. The House announced it would hold a floor vote on the bill next Thursday with final House approval on Friday - either pushing past midnight Thursday or during regular business hours after everyone gets some sleep, at the chamber's pleasure. Conventional wisdom is those late night sessions are more efficient with peer pressure working against the most loquacious members.

The House version of the bill to eliminate the common core standards passed the House and goes to the Senate. HB 1061 http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1061v3.pdf and SB 812 have some differences to be worked out, but the legislative intent to show commitment to this education change by moving both bills at once is noted. Prominent figures in North Carolina's business community oppose the elimination of common core national standards for our state, but NC Chamber head Lew Ebert says they oppose the Senate bill less than the House bill.

The House tentatively approved the companion bill on economic development changes HB 1031 http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1031v3.pdf; it will receive final House approval next Tuesday. The House amended its bill to require that the new Economic Development PPP would fall under the State Ethics Act; the Senate amended its version to fold in a new plan for film incentives. The state constitution requires that each chamber pass an identical bill so we'll watch the negotiations closely.

Mechanics Liens, HB 1101 http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1101v2.pdf and HB 1102 http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1102v1.pdf, passed the House and are parked in the Senate Rules Committee. (Use of the Rules Committee is a very powerful tool. It's a place to kill a bill, park a bill, rewrite a bill, horse trade...the possibilities are endless. Mischief abounds). We're not sure what's next for these bills but will keep you posted.

First in Flight - even unmanned. An interesting 60 Minutes story on how Amazon is experimenting with unmanned aircraft spurred creation of a House study committee that met last winter to developed a bill regulating unmanned aircraft/drones should the FAA clear the way for commercial use. That bill was sent to a special subcommittee of the House Judiciary Committee this week to hammer out the role of local law enforcement, and the impact to hobbyists. The Committee chairman has indicated his interest in voting out a bill this session.

The Patent Trolls bill (http://www.ncleg.net/Sessions/2013/Bills/House/PDF/H1032v4.pdf) passed the House and was referred to the Senate Rules Committee. We've got our eyes on it.

SB 786 (http://www.ncleg.net/Sessions/2013/Bills/Senate/PDF/S786v8.pdf) on fracking was signed by the Governor this week.

Not a peep on modernizing the state's business court.

Stay tuned next week as we learn how the US Open in Pinehurst impacts the legislative calendar.

Tuesday, June 3, 2014, 12:42 PM

Hmm. Will there be Business Court Reform this year??


We may have gotten ahead of ourselves in our excitement to see an effort to modernize (and enhance??) North Carolina's Business Court. Our first clue was that a Senate Bill (SB 853) was filed with no companion bill in the House -- not a great sign. Another clue is that the bill was not the result of interim study committee vetting. In fact, we were not the only ones surprised to see the bill filed. We've heard members of the House were also surprised. Uh oh. And I have not been able to confirm the involvement of any outside group in the drafting of the bill aside from the NC Chamber -- although the NC Chamber is having a pretty good run this session. Again.

So today we looked through the Senate's $21 Billion Budget for clues (looking for some Business Court "enhancement" opportunity). What we found was a new take on last year's Senate attempt to abolish Special Superior Court Judges. The Senate's budget bill eliminates 4 Special Superior Court Judgeships by phasing them out between now and 2016 upon resignation, retirement, or end of term for that Judge. No mention of shifting those resources or expanding the Business Court.

If you are looking to modernize and enhance the NC Business Court you have work to do. And for now you need to do that work with the NC Chamber. We'll be checking in with NC Chamber lobbyist John Goodman to see what they think will happen with the bill this session.

A long ago Speaker's Staffer (not me) once said, "The opposing party is our adversary. The opposing Chamber is our enemy." This House and this Senate, though both run with strong Republican majorities, are not in sync on all issues. Sometimes the first to blink loses; it's not clear to me the House is even looking.

Mack Sperling at Brooks Pierce wrote a great summary of the bill from a litigator's perspective, to which I respectfully defer here:  http://www.ncbusinesslitigationreport.com/2014/05/articles/watching-the-court/general-assembly-may-modernize-the-nc-business-court/index.html
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