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No tattling allowed if someone buys scalped tickets to attend this event. For the first time since the Civil War era, the Supreme Court of North Carolina is preparing a westward trek to Morganton, North Carolina for two oral argument sessions. The ticket-only event will occur on Tuesday, May 17, and Wednesday, May 18 in the Old Burke County Courthouse.

Cases being heard include a challenge by the Cleveland County Schools System to the funding of charter schools and a constitutional challenge to a statute changing control of Asheville’s water system from the city to the metropolitan sewer district. We previously blogged here about the substantial constitutional question raised by the City of Asheville case.  However, the Supreme Court also granted discretionary review on a juicy issue of appellate practice and procedure that we’ve not discussed before.

The Court of Appeals’ opinion includes both a paragraph and a footnote with the potential for creating lots of mischief for appellees.  Because the Court of Appeals’ statements are arguably ambiguous, they are quoted in their entirety below:

We do not reach any conclusion regarding Asheville’s fourth and fifth claims for relief, in which Asheville contends that the enforcement of the Transfer Provision would impermissibly impair obligations of contract in violation of our state and federal constitutions and in violation of N.C. Gen. Stat. § 159–93. The trial court made no rulings on these claims, and Asheville did not take advantage of Rule 10(c) of our Rules of Appellate Procedure, which allows an appellee to propose issues which form “an alternate basis in law for supporting the order[.]” Therefore, any argument[s] by Asheville based on these claims for relief are waived.

FN2.  The trial court refused to rule on a fourth basis in support of the injunction, namely, that the Transfer Provision unlawfully impairs Asheville’s contractual obligations with its bondholders who provided financing for its public water system, in violation of Article I, Section 10 of the United States Constitution; Article I, Section 19 of the North Carolina Constitution; and N.C. Gen. Stat. § 159–93. However, Asheville has not presented any argument regarding this fourth ground as “an alternative basis in law for supporting the [injunction],” N.C. R. App. P. 10(c), and, therefore, it is not preserved.

Appellate Rule 10(c) and companion Appellate Rule 28(c) allow appellees to argue cross-issues in their brief without taking an appeal.  Cross-issues are arguments that allow an appellee to “present issues on appeal based on any action or omission of the trial court that deprived the appellee of an alternative basis in law for supporting the judgment, order, or other determination from which appeal is taken.” Appellate Rule 28(c).  Both Appellate Rules 10(c) and 28(c) use a permissive phrase, “an appellee may,” to describe the appellee’s right to pursue cross-issues.

In City of Asheville, it was unnecessary for trial court to reach claims 4 and 5 to decide for the City of Asheville, which was the appellee at the Court of Appeals.  On appeal, the appellee did not argue those unreached claims as an alternative basis in law to support the judgment.  Thus, when the Court of Appeals’ opinion used the words “waived” and “not preserved” to described those claims in its opinion, it caused the City a bit of concern.  Was the Court of Appeals saying that by not arguing these alternative issues in its brief, the appellee had “waived” and “not preserved” those issues for purposes of the present appeal ?  Or was the Court of Appeals saying that the City’s failure to argue cross-issues in its brief was a forever waiver of its right to pursue those arguments–including on remand in the trial court?

The City of Asheville sought clarification on this issue from the Court of Appeals, but  the petition for rehearing was summarily denied the next day.  Thankfully, the waiver issue was accepted as part of the Supreme Court’s discretionary review package.  At the Supreme Court, the State (which was the appellant in the Court of Appeals and is the respondent in the Supreme Court) argues that the City of Asheville has forever waived its right to seek relief on claims 4 and 5.  On the other hand, the City of Asheville  argues that the Court of Appeals misspoke, that cross-issues are not subject to waiver if not raised on appeal, and that if this case is remanded, the trial court will still have authority to rule on these unresolved claims.

With lots of other issues involved in this appeal, there is no guarantee that the Supreme Court will reach this important issue of appellate practice and procedure.  If the Supreme Court does not provide clarity on this issue, the trial court may have to untangle whether  the City of Asheville can still pursue the alternative claims for relief that were not reached during the first round of litigation.

Moreover, the Court of Appeals’ statements regarding waiver and remand have the potential to create havoc in other cases on appeal.

Although the two Appellate Rules at issue use the permissive term “may,” the Rules do not specify how the waiver rule applies to an appellee who chooses not to raise a cross-issue on appeal.  When a trial court actually addresses an issue and decides that issue against the appellee,  conflicting policy arguments exist for requiring appellees to either raise those alternative arguments on appeal or forever waive their right to pursue them.  However, when a trial court declines to reach an alternative basis in law to support the judgment, the arguments are much stronger for allowing the trial court to address those unresolved arguments on remand–even if they were not raised in the appellee’s brief.

Indeed, many North Carolina lawyers have  encountered situations in which, as counsel for the appellee, they raised a cross-issue, but the appellate courts declined to address it for the first time on appeal   In those instances, the appellate courts will usually remand the case to the trial court, sometimes with explicit instructions for the trial court to address the alternative arguments for the first time on remand.  Given the limited briefing allowed in the Court of Appeals, and the complexity that potentially unnecessary cross-issues can bring to an appeal, appellees sometimes make the strategic decision to try to win on the limited issues addressed by the trial court and then pursue the alternative arguments on remand if the Court of Appeals decides in the appellant’s favor.  Given the Court of Appeals’ statements in City of Asheville, that  may no longer be a prudent strategy for appellees.

We are eager to hear your thoughts.  Do you think the Court of Appeals’ statements regarding waiver and preservation in City of Asheville were meant to apply to the current appeal or to the entire case?  What interpretation of the waiver rule do you think the Supreme Court should adopt?  Will the Court of Appeals’ statements influence your briefing strategies as an appellee?  And…are tickets to the oral arguments still available, and who is planning to attend?  Let us know in the comments below.

–Beth Scherer

 

In May 2016, we reported how the Supreme Court of North Carolina held oral argument in Morganton, North Carolina for the first time in over a hundred years.  A year later, eastern North Carolina is getting its own Supreme Court visit. On Tuesday, May 9 (tomorrow) the Supreme Court will hear oral argument in two cases at Edenton’s Historic Chowan County Courthouse: one at 9:30 a.m. and another at 11:00 a.m.  Built in 1767, the Historic Chowan County Courthouse is the oldest courthouse in North Carolina.  Although admission is free, tickets are required and are available to the public on a first-come, first-served basis by contacting Historic Edenton at 252-482-2637. Oral arguments will also be streamed live via WRAL.com.

Unlike the Morganton special session that required an amendment to section 7A-10, the Supreme Court has long had the authority to hold sessions in Edenton, most recently in 2004 and 2013.

While section 7A-10 limits the Supreme Court’s ability to hold session to just three locations (Raleigh, Edenton, and Morganton), a movement to permit the Supreme Court to more freely roam the State is reportedly afoot.

The North Carolina Court of Appeals is already on the move. To celebrate its 50th anniversary, the Court of Appeals most recently held oral arguments in Fayetteville, New Bern, and at Elon Law School.

In other news, the Supreme Court’s most recent batch of opinions was accompanied by  “Press Summaries.”  These short, plain-language summaries of the Court’s opinions are a quick way for both the public and practicing bar to stay up-to-date on the Supreme Court’s new opinions.  Hopefully, they will become a permanent feature in the Supreme Court.

–Beth Scherer

Today, the Supreme Court issued its final batch of opinions and two sets of rules amendments for 2017.  We will bring you more information in the days that come, but below are some of the highlights.

New Year, New Rules:  North Carolina Rules of Appellate Procedure amended and recodified effective 1 January 2017.

A new set of Appellate Rules will reign in the New Year. There are many revisions that we will discuss more fully in due course, including clarification regarding the filing of reply briefs in Rule 3.1 (juvenile) cases, tweaks to how words are counted for word limits in briefs, and clarifications to bring Rule 18 up-to-date with how administrative appeals are taken from the Office of Administrative Hearings.

Of importance to me, remember when we told you to stop using Courier font a few months ago?  The Supreme Court is killing Courier font in 2017.  An amendment to Rule 26(g)(1) now requires all appellate papers to be filed in “proportionally spaced fonts with serifs” (e.g., Constantia and Century).  Font sizes under this new rule can be anywhere between 12 and 14 point, but Rule 28(j) now requires everyone follow a word-count limit for briefs filed in the Court of Appeals (rather than a page limit).  I guess this means I have to give up my typewriter.

Update: My promised summary of the remaining rule changes can be found here.  Also, the day after this post, the Supreme Court adopted new Appellate Rule 31.1 governing en banc proceedings in the Court of Appeals, which you can read about here.

Appellees, Alternative Basis In Law To Support The Judgment, and Waiver, Oh My!

In February 2016, the Supreme Court of North Carolina for the first time in a long time retained an appeal based on the existence of a substantial constitutional question.  An important issue of appellate practice and procedure was lurking in the background.

In the trial court, the superior court had decided the case in the City of Asheville’s favor based on arguments 1 through 3, having no need to reach the City of Asheville’s arguments 4 and 5.  In the Court of Appeals, the City of Asheville (as the appellee) did not argue those unreached claims as an alternative basis in law to support the trial court’s judgment as permitted by Appellate Rule 10.  In reversing and remanding the decision to the trial court, the Court of Appeals said that arguments 4 and 5 had been “waived” and “not preserved” by the City of Asheville’s failure to argue them in its appellees’ brief.

Thankfully, the Supreme Court disavowed the Court of Appeals’ reading of Rule 10 in footnote 11 of its opinion issued today.

Although we need not reach the issue of whether the Court of Appeals erred by apparently holding that the City had waived the right to have the claims that it had asserted pursuant to the contract clauses and N.C.G.S. § 159-93 considered on remand by failing to assert those claims as an alternative basis for upholding the trial court’s order pursuant to Rule 10(c) of the North Carolina Rules of Appellate Procedure, we disavow that holding in order to avoid confusion in subsequent cases. Simply put, nothing in the relevant provisions of the North Carolina Rules of Appellate Procedure or any of our prior cases requires an appellee to challenge legal decisions that the trial court declined to make on the grounds that the case could be fully resolved on some other basis on appeal pursuant to Rule 10(c) of the North Carolina Rules of Appellate Procedure at the risk of losing the right to assert those claims at a later time.

Note that Rule 10 also allows an appellee, without taking an appeal, to argue actual adverse decisions of the trial court (as opposed to mere trial court silence) that deprived the appellee of an alternative basis in law to support the judgment.  This footnote does not address whether an appellee must raise those issues under Rule 10 to avoid waiver.

Hanesbrands Decision Confirms That Business Court Designations Are Not Immediately Appealable

The Business Court Modernization Act made a subtle change to how Business Court designations could be appealed.  Instead of designation challenges being appealed “to the Chief Justice of the Supreme Court,” the Act now requires such appeals be taken “in accordance with G.S. 7A-27(a).”

As we discussed a year ago, the prevailing practice before the change was for designations to be immediately appealed to the Chief Justice. After all, it would be wasteful for the entire litigation to be conducted in the Business Court, only to have a party successfully appeal years later and cast those proceedings in doubt.  We noticed then that the Business Court Modernization Act’s changes to § 7A-45.4 appeared to jeopardize this right to immediate appellate review, because the very same “G.S. 7A-27(a)” referenced in the Act also precludes immediate appeals from interlocutory orders unless they, inter alia, “affect a substantial right.”

Today, in Hanesbrands Inc. v. Fowler, the Supreme Court took the legislature at its word, read the statute literally, and held that appeals from Business Court designations do not necessarily affect a substantial right.

While the opinion perhaps leaves open the possibility that another litigant could articulate a better basis for immediate appellate review, it also suggests that the Chief Justice has the authority to designate any case as a “discretionary complex business case pursuant to Rule 2.1.” Query whether this suggests that a Business Court designation may actually never be effectively appealed, because a case that was improperly designated a “mandatory” complex business case could have been designated a “discretionary” complex business case anyway.

New Business Court Rules, Effective 1 January 2017

Finally, the Supreme Court issued an order today adopting a revised set of rules governing practice before North Carolina’s business courts.  The rules will apply to all cases designated on or after 1 January 2017.  The new “BCR” are the result of a lengthy review process conducted by the Business Court Rules Advisory Committee at the direction of Chief Judge Gale.

A summary of the changes included in the new Business Court Rules can be found here.

–Beth Scherer