Jeremy Falcone

North Carolina’s unfair and deceptive trade practices statute reaches a wide variety of “unfair” or “deceptive” conduct. Litigants are more frequently tripped up by the requirement that the conduct be “in or affecting commerce.”

Senior U.S. District Judge Graham C. Mullen recently relied on this requirement in dismissing a section 75-1.1 claim arising out of claims of defamation and harassment surrounding a municipal zoning board proceeding. In Orndorff v. Raley, Judge Mullen determined that what happens in a zoning board meeting stays in the zoning board—at least for purposes of a section 75-1.1 claim.

This post examines Judge Mullen’s decision.

All’s fair in love and zoning board decisions

Maria Grazia Shkut was appointed to the Village of Marvin Planning Board in 2006. Marvin is a municipality in Union County, North Carolina.

In 2010, a commercial real estate developer, Raley Miller Properties, Inc., went before the Marvin Planning Board seeking annexation of its properties. Raley Miller’s lead contact for these discussions was David Miller.

Ms. Shkut’s counterclaims alleged that the discussions between Raley Miller and the Planning Board became “highly contentious.” The Planning Board ultimately denied Raley’s Miller’s request.

Undeterred, Raley Miller renewed its request in 2014. By then, Ms. Shkut had become the Chair of the Planning Board. This time the company designated Plaintiff, Mr. Kenneth Orndorff, to lead off the discussions this time around.

Ms. Shkut received negative feedback from the Planning Board and Marvin residents regarding the annexation request. Ms. Shkut also personally provided negative feedback regarding the request.

Raley Miller retained a lawyer, who sent a letter to the Planning Board demanding that Ms. Shkut recuse herself from the consideration of the annexation request. According to Ms. Shkut, the letter also made several false statements about her.

Ms. Shkut and the Planning Board denied the recusal request. The Planning Board then again recommended that Marvin deny the annexation request. According to Ms. Shkut, Mr. Orndorff then began recording the Planning Board’s meetings, writing false commentary on the Planning Board and Ms. Shkut, and disrupting Planning Board meetings—complete with “heckling” of Ms. Shkut. Mr. Orndorff distributed the commentary to community residents. Mr. Orndorff and Raley Miller also created a Facebook group that contained postings about the Planning Board and Ms. Shkut.

In January 2017, things apparently came to a head. Ms. Shkut was now the Interim Planner for Marvin. Mr. Orndorff attended a public meeting and “heckled and ridiculed” Ms. Shkut, and Ms. Shkut made a statement about Mr. Orndorff’s conduct. Raley Miller’s lawyer send a second demand letter to the Planning Board, and Ms. Shkut ultimately quit her job with Marvin and as Planning Board Chair.

In August 2017, Ms. Shkut was reappointed to the Planning Board and re-hired by Marvin. Mr. Orndorff sued regarding his interactions with Ms. Shkut and the Planning Board.

In response, Ms. Shkut brought several counterclaims and third-party claims (bringing Raley Miller and its other partners into the suit as third-party defendants). Ms. Shkut included a section 75-1.1 claim premised largely on allegedly defamatory statements made about Ms. Shkut. Mr. Orndorff and the third-party defendants moved to dismiss the counterclaims.

The actions at the Planning Board fell outside the scope of section 75-1.1

Mr. Orndorff and the third-party defendants argued that Ms. Shkut’s section 75-1.1 claim failed to allege two of the three elements under section 75-1.1—namely that the alleged conduct was “in or affecting commerce,” and that she had suffered any damages as a result of that conduct.

Judge Mullen did not consider the damages argument, and instead focused on the “in or affecting commerce” requirement. To determine whether Ms. Shkut’s allegations were sufficient, Judge Mullen started with “the primary purpose” of section 75-1.1. The legislature intended to protect consumers from unfair practices in the marketplace, and Judge Mullen analyzed Ms. Shkut’s claims to determine whether they fell within that sphere of protection.

Ms. Shkut argued that the defamation and harassment fell within this scope. The defendants’ actions were designed to sway future zoning board decisions, and zoning board decisions necessarily impact local commerce. Judge Mullen rejected that argument, but sidestepped deciding whether zoning board activity and decisions were necessarily immune from section 75-1.1’s reach. Even if zoning board activity could fall within the scope of the statute, Ms. Shkut’s attempt to connect the harassment and defamation to zoning board decisions was too “attenuated.”

Ultimately, Judge Mullen found that Ms. Shkut’s claims were simply an attempt to convert a “political and personal dispute” into a section 75-1.1 claim.

Lessons for future litigants

Judge Mullen’s decision provides an interesting data point in locating the line between commerce and political disputes. The Boyce v. Isley series of opinions provide litigants a pathway to a section 75-1.1 claim for defamation in a political context. Ms. Shkut’s attempts, on the other hand, show that there are limits on these claims.

Author: Jeremy Falcone