Key Business Court Decisions

Does Defendant’s “Learned Profession” Preclude A Chapter 75 Claim? Consider A Common Law Claim of Unfair Competition As A Workaround

Where a claim for unfair or deceptive trade practices pursuant to N.C.G.S. §75-1.1, et al. (“UDTP”) would be barred because a defendant qualifies under the statute’s “learned profession” exception, such exception is not applicable to a plaintiff’s common law claim of unfair competition against the same defendant.  Southeast Anesthesiology Consultants, PLLC v.  Charlotte-Mecklenburg Hospital Authority, et al., 2019 NCBC 74 (J. Robinson).  Because Plaintiffs’ complaint sufficiently alleged facts that would otherwise sustain a UDTP claim but for the “learned profession” exception, Defendants’ motion to dismiss the common law claim for unfair competition was denied.

Plaintiff Southeast Anesthesiology Consultants, PLLC (“SAC”) provided professional anesthesiology services in North Carolina. As an intended third-party beneficiary of various employment agreements between its affiliate and numerous anesthesiologists, SAC entered into an agreement with Defendant Atrium Health (“Atrium”), an owner of numerous medical facilities (“Atrium Agreement”). Per the Atrium Agreement, SAC’s physicians acted as the exclusive provider of anesthesiology services to certain Atrium facilities. In the Spring of 2017, Atrium notified SAC and its physicians that defendant Dr. Wherry would be acting as its consultant to evaluate how anesthesia was delivered at Atrium’s facilities. As Atrium’s consultant, Dr. Wherry gained access to SAC’s confidential and trade secret information.  A few months before the Atrium Agreement was set to expire, SAC agreed to Atrium’s request to extend the Atrium Agreement several months while the parties discussed a potential renewal of the agreement. In doing so, Dr. Wherry gained access to more of SAC’s confidential and trade secrets information and, as alleged by Plaintiffs, used the information to start a new company (Scope Anesthesia) which ultimately ousted SAC as the provider of anesthesia services at the enumerated Atrium facilities.  Plaintiffs brought claims for misappropriation of trade secrets, tortious interference with contract (of both the Atrium Agreement and the employment agreements) and common law unfair competition. Defendants brought a motion to dismiss contending, inter alia, that because each had a “learned professional” exception that would preclude a UDTP claim under Chapter 75, Plaintiffs’ common law unfair competition claim could not survive for the same reasons. 

            The Business Court disagreed.  After acknowledging that Chapter 75 exempts a person in a “learned profession” (which would include all Defendants) from a statutorily based UDTP claim, the Business Court refused to apply the exception to Plaintiffs’ common law claim for unfair competition (Opinion, ¶58, fn.1), notwithstanding the fact that a common law unfair competition claim is “not appreciably different” from a Chapter 75 UDTP claim (Opinion, ¶59).  Without the exception to shield Defendants, and because Plaintiffs’ complaint alleged facts sufficient to support a Chapter 75 UDTP claim but for the “learned profession” exception, the Business Court refused to dismiss Plaintiffs’ common law claim for unfair competition.

            Based upon this decision, a business that qualifies as a “learned profession” under N.C.G.S. §1-75.1 should nonetheless be cautious that it might still be subject to a common law claim of unfair competition for the same conduct.

            Additional legal points from this decision:

  • Providing trade secret information to an entity subject to North Carolina’s Public Records Act does not necessarily waive the confidential nature of the information, even though the provider failed to designate the information as confidential.  (Opinion, ¶¶37,44).
  • The mere fact that a defendant “hoped to cause” an entity to breach a contract and even though the entity did ultimately breach the contract, such allegations alone are not sufficient to maintain a claim for tortious interference; inducement must be sufficiently alleged.  (Id., ¶53).
  • In order to maintain a claim for tortious interference with contract, a plaintiff must allege that it suffered actual, pecuniary harm connected to a contract right; merely alleging speculative damages is insufficient.  (Id., ¶¶55-56).

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