In federal court, an order granting a preliminary injunction is immediately appealable under 28 U.S.C. § 1292. In North Carolina courts, however, an order granting a preliminary injunction is generally not immediately appealable, unless the appellant can show that the order affects his substantial rights. If an injunction is entered in federal court and not appealed, and the case is then remanded to state court, can the aggrieved party ask the state court to revisit the injunction and thereby restart the appeals clock on the issues presented by the injunction?
In reviewing a complicated fact pattern along these lines, the North Carolina Business Court last week found that a purported appellant could not overcome the many barriers necessary to generate a proper appeal under these circumstances. See Plasman v. Decca Furniture (USA), Inc., 2015 NCBC 83.
In February 2013, a federal district court hit a 45% shareholder with a preliminary injunction for exercising control over the company in a way that deprived the majority shareholder of its right to control. In lieu of appealing the injunction order, the minority shareholder filed a “Response to Court Order” that stated that he was “not waiving [his] rights to request reconsideration or appeal” of the injunction order.
A year after the Response was filed, the case was remanded to the Business Court after all federal claims were dismissed. The parties filed cross-motions related to the minority shareholder’s (non)compliance with the injunction order, and the Business Court entered an order requiring the minority shareholder to comply with the injunction. The minority shareholder purported to appeal from that Business Court order. A dispute then arose as to whether the appeal divested the Business Court of jurisdiction to proceed, which in turn (under the famous RPR & Associates case) required an analysis by the Business Court of whether the appeal was properly taken.
The Business Court held, in short, that the minority shareholder had lost his right to appeal the issues underlying the preliminary injunction, which by now is over two years old. Because he could not show that the Business Court’s “affirmation” order affected any other substantial right, the Business Court found that the appeal was improperly taken and that the Business Court could proceed with the litigation as though no appeal had been filed.
The minority shareholder’s “Response,” however, raises some interesting jurisdictional questions under federal law. The Fourth Circuit liberally construes post-order or post-judgment motions, allowing them to be considered as Rule 59(e) or Rule 60(b) motions for amendment or reconsideration even if the motion fails to cite the applicable rule. This practice matters in federal court because such motions toll the time for appeal under Federal Rule of Appellate Procedure 4(a)(4). Does that mean that the mere filing of the “Response” indefinitely paused the appeals clock from the injunction order? And, if it did, what effect did the remand to state court have? Was the Business Court right to infer that the federal court must not have viewed the “Response” as a motion of any kind, as it never “ruled on” the Response in any fashion before remanding?
Regardless, this case nicely highlights another quirk of North Carolina law. Although the Business Court may now proceed with the case as though the appeal were never noticed, it does not have the power to dismiss the appeal under these circumstances. Instead, the appeal may continue, and the Court of Appeals* may consider for itself whether the appeal is proper, in due course.
*Because this case was designated for the Business Court back in 2012, the order was rightfully appealed to the Court of Appeals, not the Supreme Court.