Business Court Retains Case Even After ‘Jurisdictional Hook’ Claim Is Dismissed.

We know that only certain types of claims can trigger Business Court jurisdiction. See N.C.G.S. 7A-45.4. But what happens when the claim that establishes jurisdiction—the ‘jurisdictional hook,’ if you will—is dismissed? Can the case still proceed in the Business Court? That question was answered in Gallaher v. Ciszek, 2020 NCBC Order 7 (N.C. Super. Ct. Feb. 17, 2020). See Order.

Take-Away:

Once jurisdiction is established in the Business Court, the Court will retain jurisdiction even if the claim that formed the basis for jurisdiction is dismissed.

In Gallaher, the Plaintiffs asserted several claims against Defendants, none of which supported jurisdiction in the Business Court. The Defendants’ counterclaims, however, included a trade secrets misappropriation claim under N.C.G.S. § 66-152.

Ever attuned to Business Court jurisdiction, the Plaintiffs used the trade secrets claim to designate the case as a Business Court case pursuant to N.C.G.S. § 7A-45.4(a)(8) (providing for Business Court jurisdiction over “[d]isputes involving trade secrets”). The case was thereafter designated as a mandatory complex business case by the Chief Justice of the North Carolina Supreme Court and assigned to Judge Bledsoe, the Business Court’s Chief Judge.

Defendants then had second thoughts about their trade secrets claim—or perhaps about litigating the case in the Business Court. Defendants voluntarily dismissed their trade secrets claim and, the same day, filed an opposition to Business Court designation on the grounds that no remaining claim supported Business Court jurisdiction.

In a succinct, 3-page order, Chief Judge Bledsoe held that the case would stay in the Business Court—notwithstanding the dismissal of the trade secrets claim. Judge Bledsoe explained that the case had been properly designated based on the trade secrets claim, and that once “a case is ‘properly designated and assigned to a special superior court judge for complex business cases based on the [pleading] and the [notice of designation], [a party may] not render the designation and assignment improper by subsequent[] filing[s.]’” Gallaher, 2020 NCBC Order 7 ¶ 6 (citation omitted).

The lesson here: be mindful of whether your claims (or your opponent’s) provide a basis for Business Court jurisdiction. Even if a case is not brought in the Business Court, your counterclaims (or your opponent’s) could provide a ticket (or hook, depending on how you look at it) into the Business Court. And as the saying (now) goes, “once a Business Court case, always a Business Court case.”

Matt Krueger-Andes is a litigation associate in Fox Rothschild’s Charlotte office.  He regularly represents clients in the Business Court and advises on Business Court and other business litigation-related matters.  He is also a former law clerk to the Honorable Louis A. Bledsoe, III, Chief Judge of the North Carolina Business Court.