N.C. Business Court Grants a Stay Pending Appeal, but Isn’t Convinced it Will Matter.
In Vizant Technologies, LLC v. YRC Worldwide Inc., 2019 NCBC 15 (N.C. Super Mar. 1, 2019), Judge Bledsoe granted a motion for stay pending appeal of an interlocutory order under N.C. Gen. Stat. § 1-294 after identifying an infrequently sighted legal bird: a substantial right that will be adversely affected. See Order and Opinion. A party’s first sign that the victory may be short-lived? The Business Court’s contemporaneously stated forecast that the “chance of success on appeal appears slim.” The case involved a long-running dispute about the payment of fees under a Professional Services Agreement, and the manner of establishing and proving a contracting party’s damages. At issue were discretionary stays under Appellate Rule 8 and appealing interlocutory orders under the substantial right doctrine.
- The Business Court values the efficiency of single proceedings that avoid having multiple juries hear “overlapping factual questions” common to multiple parts of a party’s claim.
- The Court doesn’t shy away from telling a party it’s won a “technical” victory that it believes won’t ultimately carry the day.
In two earlier summary judgment orders, the Court laid the groundwork for the issues that would later animate the stay pending appeal dispute. Those orders decided closely related issues about the proof required for Vizant to show that it deserved a fee related to certain cost reduction strategies it suggested to YRC. In the first order, the Court excluded expert testimony that failed to demonstrate that cost reductions YRC experienced were related to Vizant’s advice. ¶12. In the second order, the Court took the next step and, under Kansas law, found that Vizant could not demonstrate damages that were appropriately linked to recommendations it had afforded to YRC. ¶18.
In considering whether to grant a discretionary stay under Appellate Rule 8, which requires first resort to the trial court, the Court relied on a previous determination that it should “focus on the potential prejudice to the appellant” in deciding such a stay request. See Rutherford Elec. Membership Corp. v. Time Warner Entm’t/Advance-Newhouse P’ship, 2014 NCBC LEXIS, at *9-10 (N.C. Super. Ct. July 25, 2014). The Court determined that the risk to Vizant of prejudice by denial of a discretionary stay was “slight,” based on Vizant’s key appellate contentions that the Court had rendered inconsistent summary judgment orders, and misunderstood the law regarding the causal connection required to prove Vizant’s damages. ¶¶ 22-23. Upon a re-examination of the evidence that underlied the summary judgment orders, the Court concluded that the North Carolina Supreme Court was unlikely to reject the Court’s analysis regarding the causal links found lacking in Vizant’s expert testimony and its damages presentation. ¶42.
The Court took a more nuanced approach to whether Vizant deserved a stay under the substantial right doctrine. While conceding that a party’s mere preference to have all claims or issues “determined during the course of a single proceeding” didn’t invoke a substantial right (see Hamilton v. Mortg. Info. Servs., 212 N.C. App. 73, 79, 711 S.E.2d 185, 190 (2011)), the Court balked at requiring Vizant to potentially litigate a claim ripe for trial and then potentially relitigate in a possible second trial – if its appeal succeeded – matters that would “substantially overlap” with evidence from the first trial. ¶50. The Court conceded Vizant found itself in a “novel position” where it could face two trials, “with substantially the same factual issues,” in the unlikely event that its appeal was successful. ¶55.
Thus, while the Court readily labeled the chances of success on appeal for Vizant as “slim,” and its risk of prejudice “slight” if a stay was denied, it nonetheless identified a conceivable scenario under which “unresolved and overlapping factual questions” could create inconsistent verdicts that merited a substantial right finding. ¶63.
Brad Risinger is a partner in the Raleigh office of Fox Rothschild LLP. He maintains a commercial litigation practice that frequently involves business disputes before the North Carolina Business Court, and the state’s federal and state trial courts.