A recent decision by the North Carolina Business Court held that an employment agreement automatically terminates upon the asset sale of one company to another, despite continued employment with the purchasing company.[1] In 2001, Andrew Lund executed an employment agreement with his then-employer, Southern Staircases of North Carolina, Inc. The agreement contained several post-employment restrictions regarding disclosing confidential information and soliciting current and future customers. The agreement also contained a duty of loyalty provision to “devote his entire working time, attention, and energies to the business of the Company and . . . [to] not be engaged in any other business…
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Fourth Circuit: Arbitration Agreement in Employee Handbook Not Binding
A recent decision by the United States Court of Appeals for the Fourth Circuit ruled that a North Carolina employee suing under federal and North Carolina law for wage and hour violations was not required to participate in arbitration despite an arbitration clause in her employee handbook.[1] The Fourth Circuit acknowledged that North Carolina law would ordinarily bind the employee via implied consent to the clause, but she signed an acknowledgement form upon receipt of the handbook that expressly stated the handbook provisions did not constitute a binding contract. Rose Lorenzo, an employee of Prime Communications, LP, managed a…
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Deceptive Conduct Likely Needed to Transform a Breach of Contract Claim to Unfair and Deceptive Trade Practice
While unfair and deceptive trade practice claims are sometimes alleged concurrently with breach of contract claims, a breach of contract alone does not constitute an unfair or deceptive trade practice. To prevail on both a breach of contract claim and an unfair and deceptive trade practice claim, North Carolina and federal courts require the breach to be accompanied by “substantial aggravating circumstances.” However, courts have provided little to no guidance on what amounts to substantial aggravating circumstances. A recent decision by the U.S. District Court for the Eastern District of North Carolina provides some insight.[1] Judge Flanagan indicated that, to be successful on both an…
