HB2 ‘Repeal’: How Does It Change Employment Law?

Labor & Employment Section

By Laura J. Wetsch

On March 23, 2016, the General Assembly enacted, and Gov. McCrory signed, HB2, which became Session Law 2016-3.  On July 18, 2016, Gov. McCrory “approved” HB169 (the legislative “fix”), which became Session Law 2016-99.

On the one-year anniversary of HB2, the NCAA set a deadline of March 30, 2016, for North Carolina to repeal HB2 or be eliminated as a possible venue for hosting any NCAA championship games through 2022. Accordingly, on March 30 the General Assembly filed, passed, and Gov. Cooper signed, HB142, which repeals both S.L. 2016-3 and S.L. 2016-99, and amends NCGS § 143-760 (created by HB2) to prevent any “local government in this State” from enacting or amending “an ordinance regulating private employment practices or regulating public accommodations” until Dec. 1, 2020 (at which point that provision expires), and preempt regulation of access to multiple occupancy restrooms, showers or changing facilities by “State agencies, boards, offices, departments, institutions, branches of government, including the University of North Carolina and the North Carolina Community College System, and political subdivisions of the State, including local boards of education,” “except in accordance with an act of the General Assembly.”

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Franchisor Exemption Again On the Table

Labor & Employment Law Section

By Laura J. Wetsch

In July 2016, and again on Dec. 14, 2016 (during the fourth special session ostensibly called to deal with HB2), N.C. House representatives introduced bills to statutorily exempt franchisors from responsibility and liability regarding North Carolina’s wage and hour, OSH, Workers Comp, and unemployment insurance requirements. The proffered language created a new statute (N.C.Gen.Stat. § 95-25.24A) providing,

“Neither a franchisee nor a franchisee’s employee shall be deemed to be an employee of the franchisor for any purposes, including, but not limited to, this Article and Chapters 96 and 97 of the General Statutes. For purposes of this section, “franchisee” and “franchisor” have the same definitions as set out in 16 C.F.R. § 436.1.”

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The Chair’s Column: We have a blog? When did that happen?

Family Law Section

By Rebecca Watts

I am excited to announce the retirement of our newsletter.  Why is that exciting news?  Because with the retirement of the newsletter comes the birth of our blog!  Publication of a newsletter required months of work soliciting and collecting articles and case law reviews.  Because it could take months to put a new edition together, information in the newsletter was rarely “breaking news,” but the blog format allows us to more easily send interesting and timely content to section members.  As the blog gets going, you can expect to see articles written by section members, case law updates, information about section activities and events, and links to articles that may be of interest to section members.  Now that I have everyone’s attention, and speaking of section activities, let’s talk for a minute about how you can volunteer to serve on one of our section’s committees.  (OK, not the most elegant segue, but hopefully you will keep reading.)

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Case Summaries of Recent N.C. Court of Appeals Decisions

By Rebecca PooleJennifer Smith and Rachel Beard

Rule 11 Sanctions

Caroline K. Grubbs v. Robert W. Grubbs Jr., Unpublished, No. COA16-129 (March 7, 2017)

Plaintiff and her trial counsel appealed from the trial court’s imposition of Rule 11 sanctions against them, denial of a Motion to Continue, and denial of a Motion for Reassignment of Judge. The Court of Appeals reversed in part, vacated in part, and remanded in part.

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A UBE For NC: You Say Bring It On

By Amber Nimocks

A few months ago, we asked NCBA members to respond to a short survey on the growing possibility of North Carolina’s adoption of a Uniform Bar Exam. More than 300 readers chimed in. Below is a snapshot of the results along with a few of the many reader comments. To read all the comments poll takers left, go to the North Carolina Lawyer page of our website.



What is your reaction to the N.C. Board of Law Examiners’ move toward adopting the Uniform Bar Exam?

The majority of the 311 respondents, 59 percent, reacted in favor of the change.

89 or 29 percent: “It’s about time.”

95 or 30 percent: “It’s a good idea.”

127 or 41 percent: “It’s an abomination.”

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Court Of Appeals Helps Clarify Line Between Ordinary Negligence and Medical Malpractice Claims


Prognosis Blog

By Todd Hemphill and Matthew A. Fisher

Since the 2001 amendments to Rule 9(j), N.C.R.Civ.P. and other related statutes, the line between whether a medical provider’s actions constitute medical malpractice or ordinary negligence has become much more important. A relatively recent N.C. Court of Appeals decision demonstrates the impact of coming down on the wrong side of that line, upholding the  dismissal of the Plaintiffs’ case alleging ordinary negligence, when discovery revealed that the Defendant’s actions, if proven, would constitute medical malpractice, and there was no Rule 9(j) certification.

In Gause v. New Hanover Reg’l Med.Ctr., __ N.C.App. __, 795 S.E.2d 411, 2016 N.C. App. LEXIS 1358 (Dec. 30, 2016), Plaintiff Gause was seriously injured in a fall during an X-ray examination at Defendant hospital.  She and her family brought an action for ordinary negligence and negligence on a theory of res ipsa loquitur.  During pre-trial discovery, evidence revealed that the fall occurred when an X-ray technician was rendering services requiring specialized skill and clinical judgment.  The trial court granted Defendant’s motion for summary judgment on the grounds that the Plaintiffs’ claim sounded in medical malpractice and failed to comply with Rule 9(j), N.C.R.Civ.P., because there had been no certification of expert review prior to filing the claim. The trial court dismissed Plaintiffs’ res ipsa loquitur claim and dismissed her ordinary negligence claim without prejudice. The trial court also denied Plaintiffs’ motion to amend the Complaint to add a claim of medical negligence.  Plaintiffs filed a Notice of Appeal.[1]

The Court of Appeals affirmed the trial court’s ruling. In analyzing the X-ray technician’s actions, the Court relied upon prior Court of Appeals decisions distinguishing medical malpractice from ordinary negligence claims.  Those cases defined medical malpractice claims as ones “alleging injury resulting from activity that required clinical judgment and intellectual skill,” and ordinary negligence claims as those “alleging injury caused by acts and omissions in a medical setting that were primarily manual or physical and which did not involve a medical assessment or clinical judgment.” 2016 N.C. App. LEXIS 1358 at p. 9 (citations omitted).

Applying those decisions to the facts of this case, the Court of Appeals relied in part on the deposition testimony of the X-ray technician, who testified that in deciding that it was appropriate for the patient to stand for her X-rays, he was exercising his professional judgment in trying to give the radiologist an optimal image without compromising the patient’s safety and comfort.  Perhaps even more damning to Plaintiffs’ case were the statements in their interrogatory answers, which contended “that Defendant, through its agents and employees, was negligent in furnishing or failing to furnish the following services: assessing the patient, inquiring about and reviewing the patient’s medical history, and administering the X-ray.”   Id. at p. 12.  The Court found that each of these services involved specialized knowledge and skills which were predominantly mental or intellectual, rather than physical or manual. Thus, because Plaintiffs’ claim sounded in medical malpractice, rather than ordinary negligence, and because the Complaint contained no 9(j) certification, it was subject to dismissal.

On the trial court’s denial of the motion to amend the Complaint, the Court of Appeals determined that Plaintiffs had failed to perfect their appeal of that issue, and therefore concluded that it did not have jurisdiction to review that Order.

Todd Hemphill and Matt Fisher are both partners and members of the Health Law Section in the Raleigh office of Poyner Spruill LLP.  Todd’s practice focuses on health care strategic planning issues, assisting provider clients in developing health care development strategies under the Certificate of Need law, negotiating health care transactions, and litigating Certificate of Need awards and denials.  Matt’s practice also focuses on the representation of health care providers, with an emphasis on HIPAA compliance, privacy and information security matters and Certificate of Need litigation.

[1] There is no discussion in the Court’s opinion regarding the res ipsa loquitur claim, so presumably, Plaintiffs did not appeal that portion of the trial court’s judgment.

Articles of Interest: March Madness, Fantasy Teams and More

Members of the Sports & Entertainment Law Section found the following recent third party articles to be of potential interest to the section:

Andrews v. Sony ATV Music Publishing

The Patriots Win At the Trademark Game, Too

Basketball, Brackets and Branding: Protecting March Madness

Major League Baseball’s Salary Arbitration

Broadcasts and Promotions Related to the 2017 NCAA Basketball Championships

Texas Lawmaker Introduces Fantasy Sports Bill; Fantasy Sports Lawyers Scrutinize the Details

Washington Post Article Highlights Alleged Improper Drug Practices By NFL Teams

March Madness: The Showdown Between the Big Ten Conference and the NCAA – Who Is Your Number One Pick?

More on Flo & Eddie: Federal Court Certifies to California State Court Question Of Whether There Is a Public Performance Right in Pre-1972 Sound Recordings

Copyright Case Against U2 Latest To Test Boundary Of Originality and Creativity

Photographer Hits Retailer Over Photo Of Player Hitting Joey Bats

Mississippi Enacts Fantasy Sports Legislation

New Wrinkle In Pre-1972 Sound Recording Cases: Georgia Supreme Court Holds that iHeart Streaming Does Not Violate State Criminal Statute


A Brief Primer On Subdivision Development Bonds

By Luke J. Farley

Payment and performance bonds get all our attention. But there is another type of construction bond you might encounter, especially if the housing market in North Carolina stays hot[1]—the so-called “subdivision development bond.”[2] Both cities and counties can provide for “more orderly development of subdivisions by requiring the construction of community service facilities” like roads, sidewalks, utilities, etc.[3] To ensure that the infrastructure improvements are completed, local governments can require “performance guarantees” from developers.[4] All performance guarantees must meet the same basic requirements.[5] The purpose of a performance guarantee is to prevent a situation where a developer begins work on a subdivision, builds some houses, and then runs out of money without completing the infrastructure, leaving residents in a half-built community without roads, sidewalks, sewer, etc. Unfortunately, incomplete subdivisions were a common problem during the last economic downturn.[6]

Performance guarantees usually take the form of surety bonds, though the developer also has the option of getting a letter of credit[7] or some other equivalent security.[8] According to the International Risk Management Institute, a bond is the preferred option because it does not require any security[9] (though the developer or its principals should still expect to sign an indemnity agreement). Other performance guarantees, like a letter of credit or certificate of deposit, would either tie up the developer’s capital or put it directly at risk as collateral.[10]

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Recommended Reading: On the State Tax Code, Clarity Combined With New Gray Area

This year, North Carolina made many changes to the Tax Code which have raised many questions coming from the construction industry. Certain construction projects, if not considered capital improvements under the Tax Code’s definitions, require that the contractors collect taxes on projects. Even if no taxes are to be collected on the projects, contractors need to understand the affidavits that they should request, or that will be requested of them. Brett Becker and John Mabe offer an explainer on the new tax in a post on the NexsenPruet Insights site.


Child Support Income Calculations and the Value Of ‘Maintenance’

By Kelly Fairman

What exactly is income? Most people think about a Friday paycheck, or profit from a business once the expenses are paid. The North Carolina Child Support Guidelines cast a much wider net. Gross income is defined by a long and non-exclusive list of financial benefits. Specifically included in the definition of gross income is “maintenance received from persons other than the parties to the instant action.”

What is maintenance and how is it calculated? There are many different perspectives in the family law bar, and probably the judiciary, on this issue. One common misperception is that including the value of living expenses reduced by the contributions of a third party is “imputing” income. There are other arguments as to whether the contributions count as gifts, but this may have limited relevance, as both “maintenance” and “gifts” are included in gross income. Many practitioners read inclusion of these benefits as discretionary.

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