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Business Court Judges Explain Section 75-1.1

Ellis Winters

Ellis & Winters

You never know what you’ll find by Googling.

In my research for this blog, I recently found a June 2006 presentation on section 75-1.1 by Judges Al Diaz and John Jolly.  This presentation occurred when Judge Diaz and Judge Jolly were serving together on the North Carolina Business Court—that is, before Judge Diaz joined the U.S. Court of Appeals for the Fourth Circuit in December 2010.  The audience for the presentation was the Conference of North Carolina Superior Court Judges.

(The original presentation was in a slide format that didn’t translate well to PDF, so for readability, we’ve converted it into a lighter-colored format.)

The presentation gives an overview of the law under section 75-1.1 (as of 2006).  Although Judge Jolly and Judge Diaz have both written several opinions on section 75-1.1, this presentation is more interesting than any one opinion would be, on a couple of levels:

  •  First, it covers a wider range of topics under section 75-1.1 than any opinion could ever cover.
  •  Second, the presentation is material that dozens of other North Carolina judges—judges who might not encounter section 75-1.1 quite as often—have on their bookshelves.

One of the most interesting parts of the presentation is the section at the end called “practical pointers.”  This passage, in particular, caught my eye:  “Be on lookout for UDTPA claims thrown in to gain leverage for what is really a breach of contract case.  A not-uncommon practice.  Potential sanctions.  See Meineke.

Here and elsewhere, the judges cited Broussard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331 (4th Cir. 1998).  In Meineke, a class of Meineke franchisees parlayed a dispute over Meineke’s compliance with franchise agreements into a 590-million-dollar judgment.  The Fourth Circuit reversed the judgment with this ringing language:

[T]he district court should not have allowed [a section 75-1.1] claim to piggyback on plaintiffs’ breach of contract action. . . . The courts differentiate between contract and deceptive trade practice claims, and relegate claims regarding the existence of an agreement, the terms contained in an agreement, and the interpretation of an agreement to the arena of contract law.  Given the contractual center of this dispute, plaintiffs’ UTPA claims are out of place.

By citing Meineke here, Judge Diaz and Judge Jolly showed the Business Court’s ongoing concern for policing the distinction between single-damages claims for breach of contract and treble-damages claims under section 75-1.1.  The court has enforced this distinction in a number of recent opinions as well.  We will discuss this distinction further in future posts.

In sum, even though Judge Diaz is no longer on the Business Court, this presentation still offers a rare, less filtered, look at what expert North Carolina judges think about section 75-1.1.

May 27, 2014
Posted in  Overview and Orientation