Representing Small Businesses (and Their Owners)

Small business owners have a lot on their plate. Growing a small business is not a simple task, and protecting a business legally isn’t either. It’s extremely important that owners work with an attorney who understands the complexities that arise in representing owners in their individual capacities, and their business in its corporate capacity.

Woods v. City of Greensboro, a case this firm handled at the 4th Circuit Court of Appeals, is an excellent example that demonstrates how complex representing owners and businesses can be. In Woods, the plaintiffs alleged they were denied a business loan because of their race and sued on behalf of themselves, and on behalf of their business. The trial court ruled, however, that the plaintiffs did not have standing to assert discrimination claims on behalf of themselves. Standing is a legal doctrine that involves abstract legal principles, but basically it means a person must be directly affected by a legal dispute in order to assert a claim. Since the loan was to the business, and not to the plaintiffs in their individual capacities, the plaintiffs were not parties to the contract and therefore had no rights that could be violated if the contract were breached. The trial court also ruled the business did not have standing but for different reasons. On appeal, attorney Mark Hayes successfully argued the business had standing, but the issue of standing with regard to the individuals was not appealed.

Individuals seeking representation on behalf of themselves and their small businesses have a lot to consider. To begin with, it may not be possible for an attorney to represent both an individual and their business because of conflicts of interest. Lawyers owe a duty of loyalty to each of their clients, and when clients have related interests, it can cause problems. For example, in a family business, conflicts between and among members may be rife. When family disputes become business disputes, representing both the individuals and their business may be impossible. Likewise, having one attorney represent multiple individuals jointly can be tricky for the same reasons. The individuals have related interests, but will not always agree on everything. Since the attorney has a duty to represent each individual to the best of her ability, representing multiple individuals on the same matter may not be possible or advisable.

If the lawyer represents only the business, it should be clear from the outset that the business, and not the individuals, is the client. This can be confusing to individuals seeking representation for their business, so lawyers should always be clear about who the client is and what it means to be a client. Individuals should be informed of their “corporate Miranda warnings” and understand that legal action in the interest of the business may be taken even if that action is adverse to the interests of the individuals themselves.

Having a single attorney represent both the business and the individuals can save money, and consolidating legal matters in one firm or attorney can make legal representation a lot easier as well. Attorneys often do represent both the owners and their businesses simultaneously, but that decision should be made after careful consideration. A number of complications, especially conflicts of interest, may arise. Conflicts of interest may be apparent at the outset and prevent a lawyer from beginning representation, or they may develop later and require a lawyer to end representation. If irresolvable conflicts of interest arise later and the attorney can no longer continue representation, it can end up costing the businesses and individuals more money and time.

Successful Appeal Replaces 15+ Year Prison Sentence With Time-Served

When attorneys are asked legal questions, most often the answer is “it depends.” This response might seem like lawyerly waffling, but it’s true. Cases can come down to very specific facts and involve novel situations, and it’s usually unclear how the court will interpret and apply the law in those instances.

This was the situation in State v. Andrews, an interesting case involving larceny. Andrews had taken property from two women’s purses in a medical office. The women were lying face down on a table, with their purses about five feet away in the corner. Andrews’ defense at trial argued that misdemeanor larceny, as opposed to “larceny from the person” applied. The difference between the two crimes is just one element, but the difference in sentencing for Andrews was many years. Misdemeanor larceny is the taking of property from another person, but “larceny of the person” requires that the property be either attached to the person, or “under their protection” and “in their presence” at the time of the taking. At trial, Andrews was convicted of “larceny of the person,” and sentenced to over 15 years.

On appeal, attorney Mark Hayes successfully argued that “larceny of the person” did not apply. Mr. Andrews was re-sentenced on a misdemeanor charge, which changed his long prison sentence into a sentence of time-served.

After an exhaustive review of case law, Attorney Hayes came to several original conclusions about larceny from the person. For example, in every case where the North Carolina Court of Appeals had upheld larceny from the person, the victims could have readily reached the objects without moving their feet. In this case, attorney Hayes noted the women would have had to raise themselves up off the table, dismount the table, and then walk five feet before reaching the items. Of course, the law doesn’t explicitly state that victims must be able to readily reach objects without moving their feet, but drawing this conclusion helped the court understand what “from the person” means when applied to actual circumstances. Attorney Hayes also observed another pattern with regard to distance—the Court of Appeals had consistently emphasized being within a “hand’s reach” of the item. Neither of these women met this criteria, and the Court of Appeals reversed the decision of the trial court.

In this case, the facts came down to several specific details, such as the physical distance between the women and their property. The law didn’t describe specifically what “within their presence” means, much less delineate a precise, measurable distance. Instead, both parties had to argue their interpretation of the law to the court. In the future, perhaps the court would consider other ways of interpreting and measuring “under their protection,” by taking into account the time and difficulty it would take to reach the item, for example.

— CM

Oral Arguments

Have you ever wondered what “Oral Arguments” are? Scroll down to the bottom of this post for an audio excerpt!

In an appeal, both parties submit a series of written briefs to the appellate court, in which they argue the merits of their case and ask the court to either affirm or reverse the decision of the lower court. Usually, the appellate judges read these briefs and decide who “wins” based on the information provided in the briefs.

Sometimes, however, the appellate judges want to hear oral arguments from the attorneys on both sides before making their decision. If a case is selected for oral argument, the attorneys argue in court in front of a panel of (usually) three randomly selected judges. Each side gets a very limited amount of time to argue their case, usually about 20 or 30 minutes. The attorney for the “petitioner” (the party who filed the appeal) argues first, and then the “respondent” (the party responding to the appeal) argues. The petitioner can make a final concluding argument after the respondent has finished, if she chooses to reserve time for rebuttal.

Essentially, each side will argue in a straightforward fashion the reasons why the court should rule in their favor. Arguments need to be very clear and succinct. A successful oral argument will not attempt to reiterate every single argument from the written brief; attorneys should pick the strongest arguments and focus on those. Otherwise, the weaker reasons can distract or detract from the better, stronger arguments.

Oral arguments are an opportunity to have a formal “conversation” with the judges in order to persuade them that your interpretation of the law is the correct interpretation. Once an attorney begins their argument, the judges may interrupt to ask any questions they have. Judges might want to clarify a point of law or fact, or ask a question about an entirely different point or concern.

If a case is selected for oral argument, it usually means the case presents either an interesting question of law, or the case involves a complex set of facts. For the appealing party, it’s also a good sign, because it means their case at minimum is not a “slam dunk” loser.

Oral arguments are rare but exciting. Mark Hayes has participated in oral arguments at the Supreme Court of North Carolina, the North Carolina Court of Appeals, and the Fourth Circuit Court of Appeals. As an experienced advocate and orator, Mr. Hayes’ maintains a working relationship with the professors at his alma mater, UNC Law, where he has previously taught as an adjunct professor.

Below is an excerpt from Mr. Hayes’ oral argument in front of the Fourth Circuit, in Woods v. City of a Greensboro, a multimillion dollar lawsuit that involved racial discrimination. Mr. Hayes, arguing on behalf of the plaintiff, is asked to explain a comparison he made earlier in the argument.

Intern Announced by the Law Office of Mark Hayes

The Office of Mark L. Hayes is proud to announce the hiring of its second intern for the summer of 2017—University of North Carolina School of Law student Chelsea Masters.

Chelsea is a rising third year student, former staff member of the North Carolina Journal of Law & Technology, Deputy Assistant to the Attorney General, member of the Broun National Trial Team, and member of Holderness Moot Court. Before attending law school, Chelsea worked as a bilingual legal advocate for victims of domestic and sexual violence at the Durham Crisis Response Center in Durham, NC.

This summer Chelsea will assist Mark in a number of tasks, including writing a brief for a case on appeal.

The firm handles all manner of appellate cases, with a large caseload of criminal and family appeals. Mr. Hayes is an expert in North Carolina appellate law. His firm, which focuses on appeals, is one of the few of its kind in North Carolina. Since starting his own practice in 2011, Mr. Hayes has represented clients at the North Carolina Court of Appeals, the North Carolina Supreme Court, and the United States Supreme Court. A number of his cases have received media attention, including, most recently, Woods v. City of Greensboro. Woods sued the City of Greensboro for racial discrimination in a multimillion dollar lawsuit. Mr. Hayes successfully argued on behalf of Woods in the 4th Circuit, and the story was covered by the Associated Press. Mr. Hayes also successfully argued in front of the United States Supreme Court in Grady v. North Carolina, a case covered widely in the national media. The case involved the Fourth Amendment, GPS tracking, and privacy rights.

Correcting Mistakes Made at Trial

An experienced appellate attorney must be able to make lemonade out of lemons. On appeal, a client’s arguments may be limited by the mistakes of his trial attorney, or by the mistakes he made in representing himself.

For example, a husband represented himself in a recent divorce. Although he had a highly sophisticated knowledge of the various pieces of real and personal property that would be included in determining the overall “marital property,” he failed to anticipate how challenging it would be to prove the value of those various assets. One asset proved particularly difficult because it was, in its nature, fluid and unpredictable with regard to its cash value. Eventually, the wife introduced evidence in the form of an email that the trial court used to establish the value of the asset. If neither party had presented evidence of the asset’s value, it would have “fallen through” – the court would have determined that the asset should not be included in its calculation of the marital property.

As an appellate attorney, Mark Hayes knows that the husband’s self-representation at trial created a problem for his eventual appeal. The email, which was admitted into evidence by the trial court, was not objected to because the husband was not aware that it fell short of the requirements in the Rules of Evidence. This failure limited which arguments could be presented on appeal. An experienced appellate attorney will be able to work within the confines of such mistakes, whether they were made by the trial attorney or by the client in representing himself.

“Whether the asset is shares of stock or the marital home, both of which could be valued very differently depending on who you ask, this case illustrates the importance of having experienced attorneys both at trial and on appeal,” commented Mark Hayes. “It helps me bring a stronger challenge on appeal if the trial attorney, or the client for that matter, is able to preserve issues by objecting to things such as admitted hearsay,” he continued. “The reality is that even experienced trial attorneys will occasionally miss something like this, and the client is limited in what they can do on appeal,” Hayes said. However, an experienced and skillful appellate attorney such as Mark Hayes can correct a lot of mistakes made during trial, either by the trial attorney or by a pro se client.

Suing an Out-of-State Party

Attorney Mark Hayes represented an out-of-state corporation in a recent breach of contract case. The case was eventually dismissed for lack of personal jurisdiction over the corporation, and on appeal Hayes defended the corporation’s trial win on the grounds of lack of jurisdiction.

As described in the July 30, 2015, post on jurisdiction over a custody order, jurisdiction essentially sets the boundaries to a court’s authority – what matters it can decide and what parties it can affect. For a court to be able to decide on a legal dispute, it must have both subject matter jurisdiction (the authority to rule on the specific legal question) and personal jurisdiction (the authority to rule on a matter involving the specific parties in the dispute). For disputes involving out-of-state parties, personal jurisdiction can present a significant hurdle.

International Shoe Co. v. Washington, the seminal United States Supreme Court case on personal jurisdiction over out-of-state parties, requires an out-of-state actor (particularly a corporation) to have “minimum contacts” with a state in order for that state’s courts to be able to decide a legal dispute in which the corporation is a party. If the out-of-state corporation does not have sufficient minimum contacts with the host state, exercising jurisdiction over the legal dispute would constitute an offense of “fair play and substantial justice.” This means that a New Mexico corporation, for example, needs to have some minimal relationship with North Carolina, by employing people in North Carolina, selling its products in North Carolina, or conducting some other significant business activity in this state. If such a relationship exists, the corporation is benefiting from the laws of North Carolina, and it would not be unfair to haul that New Mexico corporation into court in North Carolina.

Courts tend to look at the International Shoe test as being two-pronged, first addressing the minimum contacts requirement before considering fairness and justice. However, courts will treat the two as interdependent on a sliding scale. This means that stronger contacts with the host state will allow the court to exercise personal jurisdiction despite a weak showing that it would be fair and just. Conversely, if the corporation were in South Carolina rather than New Mexico, and thus questions of fair play and substantial justice are minimal due to the proximity between the corporation and the host state, a North Carolina court would not need as much of a showing in minimal contacts. Additionally, states also have their own laws on when jurisdiction can be asserted, adding yet another wrinkle to the issue – an assertion of personal jurisdiction must comply both with the International Shoe test and with the relevant state statute.

Personal jurisdiction is a complex concept that can be difficult for non-lawyers to grasp. Durham-based attorney Mark Hayes has helped his clients navigate its waters before, representing both in-state clients and out-of-state clients in cases which turned on the question of jurisdiction.

Evidence of a Defendant’s Prior Bad Acts

Attorney Mark Hayes recently handled an appeal that points out the complexity and importance of Rule 404 and “prior bad acts” evidence. Rule 404 often governs whether or not a defendant’s prior record can be held against him in a trial on new charges. Such evidence is only permitted for certain purposes, and that admitting such evidence for an improper purpose can serve as grounds for an appeal.

The North Carolina Rules of Evidence govern what information can and cannot be presented during trial. These rules, and specifically Rule 404, prohibit the introduction of information about the prior bad acts of a defendant to prove that the defendant has a propensity toward the conduct involved in those prior bad acts. For example, in a case involving an assault charge as a result of a bar fight, the prosecuting attorney cannot present information that the defendant had previously been in bar fights to serve as evidence that the defendant has a propensity toward bar fights, or violence in general.

If, for example, a criminal defendant charged with assault is claiming that he acted in self-defense, Rule 404 bars the prosecutor from presenting evidence of the defendant’s prior convictions for assault to establish that he has a violent character, or that he has a propensity for violence, and thus the defendant was the aggressor. However, if the defendant introduces certain evidence about his character or the character of the victim, this opens the door for the prosecutor to present evidence to rebut. For example, if the criminal defendant charged with assault presents evidence of his overall peaceful nature, the prosecutor may present evidence of his prior assault convictions to rebut the defense’s theory of peacefulness.

Additionally, Rule 404 carves out a number of exceptions for the prohibition on using prior bad acts evidence. For example, the prosecutor can use such evidence to establish a lack of mistake. For instance, a criminal defendant charged with marijuana possession may claim that he mistook the substance for oregano, and thus had no knowledge that he was committing a crime. However, Rule 404 would permit the prosecutor to present evidence of that defendant’s prior convictions for marijuana possession to establish that the defendant did not mistake the substance in his possession for oregano.

Rule 404, although complex to a lay individual, is a very familiar rule for experienced trial and appellate attorneys such as Durham’s Mark Hayes. Hayes’ experience allows him to fully grasp the various contours of the rule, when to present evidence on character or propensity, and when to challenge the evidence presented by the opposing party.

Scalia Memorabilia

While Justice Antonin Scalia of the U.S. Supreme Court was a divisive figure on many issues, I hope we can all agree that he was a great defender of our 4th Amendment rights to privacy. Here is a bit of Scalia memorabilia where he signed one of our briefs to the Supreme Court.


Evidence: To Admit or To Exclude?

Most readers will admit to watching, or at least having seen, television shows about trial lawyers. Boston Legal, The Good Wife, Law & Order – the list goes on. In those shows, a trial lawyer will demonstratively stand up and declare “I object,” to a particular photograph being shown to the jury or a particular question by the opposing attorney. Real attorneys, such as Durham-based appellate attorney Mark Hayes, understand that, although perhaps more dramatic than the real life equivalent, this is oftentimes a relatively accurate depiction a trial lawyer’s duty to object to the inclusion or exclusion of evidence. This issue is particularly relevant if one of the parties involved in the case appeals the court’s decision, regardless of whether the case was a criminal prosecution, a divorce proceeding, a complex contractual dispute, or any other legal matter.

For example, in a dispute between employee and employer over unpaid wages, a copy of the employer’s financial records showing exactly when, to whom, and what amounts of compensation were paid to the employer’s employees could be an extremely significant piece of evidence. If the financial records show that the employer did in fact pay the employee, but the evidence was not admitted and the court found in favor of the employee, the employer would want to appeal the court’s decision not to admit the evidence. Conversely, if the financial records show that the employer in fact failed to pay the employee, but the evidence was not admitted and the court found in favor of the employer, the employee would likewise want to appeal the court’s decision not to admit the evidence.

Being able to appeal on the issue that a trial court incorrectly failed to admit and consider certain evidence means that such a decision by the trial court is not necessarily final. Appellate attorneys such as Mark Hayes will frequently be able to argue that a trial court would have had a better understanding of the facts of a case if it had admitted and considered evidence that it decided not to admit.

The Structure of the North Carolina Court System

The North Carolina Court System can be confusing.  What’s the difference between District Court and Superior Court?  How does the Court of Appeals relate to the N.C. Supreme Court?  Why is there a state court system and a federal court system in the same state? Here is a brief overview.  

First, consider this basic graphic of the state court hierarchy:

U.S. Supreme Court

N.C. Supreme Court

N.C. Court of Appeals

County Superior Court —– County District Court

County District Court

Administrative Hearings

This list roughly describes the court system as a ladder, where Administrative Hearings are at the very bottom and the U.S. Supreme Court is at the very top.  

Administrative hearing “courts” are decision-making agencies like the Industrial Commission, which decides Worker’s Compensation appeals.  Some cases start on this bottom rung, and if you lose there, you appeal the decision up the ladder, usually skipping over district court and going straight to superior court.

Some cases — in fact, most cases, do not start on the bottom rung.  They actually begin in the court system, in district or superior court.  District court appears twice because in criminal cases, a defendant may be tried for some lesser crimes in district court and then, if he does not like the result, can get a from-scratch “re-do” in superior court.  This re-do isn’t really an appeal since it is another trial.  Other cases are held in district court and then the next step is to appeal to the Court of Appeals, skipping the superior court.

The appellate (appeals) courts start with the Court of Appeals.  If an appellant – a person appealing —  loses there, then he can appeal to the N.C. Supreme Court.   Then it’s on to the U.S. Supreme Court.

However, the federal court system, which can also begin in North Carolina, uses a different ladder (listed below).

U.S. Supreme Court

Fourth Circuit Court of Appeals

North Carolina Federal District Court

The North Carolina federal court system is divided into the Eastern and Western Districts. These courts hear federal cases — either a case involving a question of federal law or a case involving citizens of different states in a dispute over at least $75,000. An appeal from one of these courts would go to the Fourth Circuit Court of Appeals, located in Richmond, Virginia. Similar to the state court system, an appeal from the appellate court goes to the U.S. Supreme Court.

For more helpful information on understanding the structure of the North Carolina court system, click on the links below:

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