Q: Are pre-conflict NC contacts relevant?
Q: What if they relate to a separate contract between the parties?
A: Yes. Still relevant.
In Button v. Level Four Orthotics & Prosthetics, Inc., 2020 NCBC 18 (Mar. 13, 2020), Judge Robinson considered whether the court could exercise personal jurisdiction over Florida defendants based in part on their course of dealing with the NC plaintiff, including “pre-conflict” NC contacts and consent to NC jurisdiction provisions in other contracts between the parties. Adopting a broad view of what contacts are relevant, the Court held the Florida defendants were subject to PJ.
Background and Relevant NC Contacts
Mr. Button was resident of New Jersey. He was hired as CEO for a North Carolina corporation with its principal place of business in Winston-Salem, and he split work time between New Jersey and North Carolina.
Mr. Button’s NC employer was owned by two Florida entities. Mr. Button entered into an employment contract with his NC employer, as well as a series of contracts conferring stock purchase and other rights with the Florida entities. Notably, these agreements each had North Carolina choice of law, venue, and/or consent to NC jurisdiction provisions.
Executives from the Florida entities, themselves Florida residents, negotiated Mr. Button’s various employment agreements and oversaw Mr. Button’s work and performance. But these Florida executives rarely if ever traveled to NC, and their other NC contacts were limited and involved pre-conflict activities like hiring Mr. Button and managing operations of the NC entity. The Florida executives also claimed that most of their interactions with Mr. Button occurred while Mr. Button was working from New Jersey, not North Carolina.
After a little over a year, the relationship soured. Mr. Button claimed that the Florida entities and executives reneged on promises in his employment agreement. The Florida executives apparently disagreed, and they abruptly fired him.
Mr. Button Sued. Defendants Moved to Dismiss.
Mr. Button leveled a slew of claims against his NC employer, the Florida entities, and two Florida executives. The claims sounded in both contract (e.g., employment agreement) and tort (e.g., tortious interference). The defendants responded with a salvo of targeted Rule 12 motions, including motions to dismiss and lack of personal jurisdiction. Judge Robinson ruled on all of these motions. This post focuses only on PJ.
Contacts Pre-dating the Conflict and from Other Contracts Are Still Relevant
The Florida defendants argued their contacts with NC were mundane, did not give rise to the dispute, and did not justify PJ. Judge Robinson disagreed. He explained that the defendants’ view of relatedness was too narrow. Instead, citing the Supreme Court’s recent decision in Beem USA Limited-Liability Ltd. P’ship v. Grax Consulting, LLC, — N.C. –, 838 S.E.2d 158 (2020) (my recent post on Beem), Judge Robinson explained that these defendants’ course of dealing with Mr. Button, managing operations of their NC subsidiary, and even the consent to jurisdiction in other contracts, were all relevant and established PJ.
The Florida defendants had ongoing and direct participation in management of Mr. Button’s employer – a NC entity, including conduct Mr. Button claims to be in breach of his employment agreement. During negotiations, operations, and through termination, the Florida executives never differentiated which entity they were representing. More importantly, their course of conduct showed that they contemplated continuing obligations with both Mr. Button and their NC subsidiary. In addition, even though Judge Robinson dismissed Mr. Button’s claims for breach of the other various stock purchase agreements with the Florida entities without prejudice (finding no case or controversy), he held that the consents to NC jurisdiction in those other agreements were still relevant. It showed that these defendants contemplated that they could be hailed into Court in NC on matters related to their relationship with Mr. Button. Ultimately, Judge Robinson concluded that these acts and contacts were all related to the litigation, and they justified personal jurisdiction.
This ruling reminds NC litigants not to take an overly narrow view of relevant contacts. If you have a contact related to both the plaintiff and NC, it’s probably relevant.