While a company may appreciate the Business Court’s rules and seek its guidance and protection in certain tax-related matters, such appreciation and desires are not a sufficient basis upon which the Business Court can exercise jurisdiction.  In re Summons Issued to Target Corp., 2018 NCBC 125.  (J. Bledsoe).  Absent a statutory basis for the Business Court to exercise its jurisdiction, the matter must remain in the General Superior Courts.

North Carolina Secretary of Revenue filed an Application for an Order to Enforce Summons against Target Corporation and its affiliates in Wake County Superior Court.   Through the Application, the Secretary sought information and documents related to Target’s tax liability. Target filed a Notice of Designation under G.S. §7A-45.4, seeking to designate the Application as a mandatory complex business case on the basis that the tax summons enforcement proceeding either involved the law governing corporations or involved its trade secrets.  (Opinion, ¶3).  The Secretary objected to the designation.

Finding that tax enforcement matters apply to companies and individuals alike, the Court rejected Target’s initial contention that the matter involved the law governing corporations simply because corporations needed guidance from the Business Court to determine the proper procedures to be followed in an enforcement proceeding (since the Rules of Civil Procedure did not apply).  (Opinion, ¶10).   The Court similarly rejected Target’s contention that, because of the Application was so broad that it would capture its confidential and trade secret information, the Application necessarily involved its trade secrets.  Instead, the Court held its jurisdiction did not extend to refereeing discovery disputes involving a trade secret unless the underlying action itself qualified for a Business Court designation.  (Id., ¶11).  While sympathetic to Target’s overall concerns that North Carolina’s statutory scheme did not provide adequate protections for a taxpayer in these types of scenarios (Id., ¶13, 14), the Court nonetheless recognized such concerns were better addressed by the legislature than the courts.

While not all tax-related matters are necessarily excluded from the Business Court’s jurisdiction, (Opinion, ¶¶7-8), a corporation should closely analyze potential statutory bases for invoking the Business Court’s jurisdiction if it hopes to keep its tax-related matters inside the Business Court’s realm, since appreciation for its rules and procedures is not enough.