Bennett v. Commercial Coll. of Asheboro, Inc.

Bennett v. Commercial Coll. of Asheboro, Inc., 2016 NCBC 24.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
GUILFORD COUNTY 15 CVS 7444

AMANDA BENNETT and ERNEST
BROOKS on behalf of themselves and all
others similarly situated,

Plaintiffs,

v.
ORDER APPROVING DISMISSAL
COMMERCIAL COLLEGE OF
ASHEBORO, INC. d/b/a BROOKSTONE
COLLEGE OF BUSINESS, F. JACK
HENDERSON III, and MARLENE
HENDERSON,

Defendants.

{1} THIS MATTER is before the Court sua sponte to review a settlement
agreement and determine whether the parties are entitled to the dismissal
stipulated to by all parties in the March 3, 2016 Stipulation for Order of Dismissal.
{2} Plaintiffs Amanda Bennett and Ernest Brooks (collectively, the “Named
Plaintiffs”) asserted class action claims against Defendants Commercial College of
Asheboro, Inc. d/b/a Brookstone College of Business, F. Jack Henderson, III, and
Marlene Henderson (collectively, “Defendants”) in their Amended Complaint arising
out of the closing of Brookstone College of Business. Defendants sought dismissal of
some of the claims, and the Court held a hearing on the Partial Motion to Dismiss
on December 11, 2015. The parties engaged in a mediated settlement conference on
January 28, 2016, reached a settlement on all issues, and filed the Stipulated
Dismissal seeking dismissal of all claims with prejudice.1
{3} For reasons explained below, the Court ordered Plaintiffs to submit certain
information regarding the terms of the settlement before giving effect to the
stipulated dismissal. With the Court’s leave, Plaintiffs submitted the requested

1
The Court does not view as suspect that the parties reached a settlement while the Court’s decision
on a motion to dismiss was pending. The Partial Motion to Dismiss sought dismissal only of
Plaintiffs’ tort claims; the case would have moved forward on Plaintiffs’ contract claims regardless of
the Court’s decision.
materials for the Court’s review in camera. Having reviewed the requested
materials, the Court CONCLUDES that the voluntary dismissal of this action with
prejudice is proper.
The Googasian Firm, P.C., by Dean Googasian and Thomas Howlett,
and Mike Lewis Attorneys, by Michael J. Lewis, for Plaintiffs Amanda
Bennett and Ernest Brooks.

James, McElroy & Diehl, P.A., by John R. Buric, John S. Arrowood,
and Jon P. Carroll, for Defendants Commercial College of Asheboro,
Inc. d/b/a Brookstone College of Business, F. Jack Henderson III, and
Marlene Henderson.
Bledsoe, Judge.
{4} With a decision on Defendants’ Partial Motion to Dismiss pending, the
parties engaged in a mediated settlement conference, reached a settlement on all
issues, and filed the Stipulated Dismissal, purporting to dismiss all claims with
prejudice. This arrangement is different from most pre-certification settlements of
class actions in the Business Court; often, the Court certifies a class for settlement
purposes and contemporaneously approves the terms of the settlement under the
guidance of N.C. R. Civ. P. 23. See, e.g., In re PokerTek Merger Litig., 2015 NCBC
LEXIS 10 (N.C. Super. Ct. Jan. 22, 2015); In re Harris Teeter Merger Litig., 2014
NCBC LEXIS 47 (N.C. Super Ct. Sep. 24, 2014). See also Ehrenhaus v. Baker, 216
N.C. App. 59, 717 S.E.2d 9 (2011) (affirming in part and reversing in part Business
Court’s class certification and settlement approval order, reversing only for further
factual findings as to attorney’s fees).
{5} Although this matter never reached the class certification stage, at which
point Rule 23(c) operates to give notice, and ensure the fairness, of any settlement
to all class members, our appellate case law nevertheless places certain limits on
voluntary dismissals of purported class action complaints. Because a plaintiff filing
a class action demonstrates a willingness to take on the responsibilities of a class
representative, “putative class members may rely on the named plaintiff’s stated
intentions to represent the class. Under such circumstances, trial courts have a
duty to assure that putative class members will not be prejudiced, procedurally or
otherwise, by voluntary dismissal of the class-action complaint.” Moody v. Sears,
Roebuck & Co., 191 N.C. App. 256, 269–70, 664 S.E2d 569, 578–79 (2008) (“Moody
I”).2 The Court therefore must make a limited inquiry to determine “(a) whether
the parties have abused the class-action mechanism for personal gain, and (b)
whether dismissal will prejudice absent putative class members.” Id. Plaintiffs will
be entitled to a voluntary dismissal if neither of these concerns is present. Id.
{6} In implementing this mandate, this Court (Tennille, J.) has previously set
forth the “procedures that counsel must follow in pre-certification class actions
assigned to Special Superior Court Judges for Complex Business Cases when a
plaintiff who has assumed a fiduciary duty by filing a class action subsequently files
a voluntary dismissal.” Moody v. Sears, Roebuck & Co., 2008 NCBC LEXIS 14, at
*3 (N.C. Super. Ct. Aug. 6, 2008) (“Moody II”). See also Thomas Cook Printing Co.
v. Subtle Impressions, Inc., 2008 NCBC LEXIS 18 (N.C. Super. Ct. Oct. 24, 2008)
(applying Moody II to a pre-certification voluntary dismissal); Order on Joint
Motion for Approval of Pre-Certification Voluntary Dismissal, Keister v. Nat’l
Council of the YMCA of the U.S., No. 12 CVS 1137 (N.C. Super. Ct. Apr. 12, 2013).
{7} Here, the Court required counsel to submit:
[A] statement of (1) the reason for dismissal, (2) the personal gain
received by Plaintiffs in any settlement, (3) a statement of any other
material terms of the settlement, specifically including any terms
which have the potential to impact class members, (4) a statement of
any counsel fees paid to Plaintiffs’ counsel by Defendants, and (5) a
statement of any agreement by Plaintiffs restricting their ability to file
other litigation against any Defendant. Plaintiffs’ counsel shall also
file a statement either detailing any potential prejudice to putative
class members or representing to the Court that no prejudice exists.
(Order ¶ 5, Mar. 7, 2016) (citing Moody II at *4). In this case, where the factual
record has not been developed beyond the Amended Complaint’s allegations that
the class comprised “hundreds of adults” who paid Defendants “millions of dollars,”
(Am. Compl. ¶¶ 22, 51), these procedures are necessary to “provide the supervision

2 This duty arises not from N.C. R. Civ. P. 23(c), but from the broad discretion afforded to trial courts

in matters pertaining to class action lawsuits. Moody I at 578, 191 N.C. App. at 268.
and transparency encouraged by the Court of Appeals with respect to class action
litigation.” Moody II at *10–11.
{8} Having reviewed the requested statement and a copy of the settlement
agreement submitted by Plaintiffs’ counsel, the Court concludes that the parties
have not abused the class action process for personal gain and that dismissal will
not prejudice putative class members.
{9} Abusive practices in class action litigation include defendants avoiding
class action certification by buying off named plaintiffs or plaintiffs coercing
unusually generous individual settlements from defendants. Moody I at 269, 664
S.E.2d at 578 (citing 5 Moore’s Federal Practice § 23.64[2][a] (3d ed. 2008)). Those
scenarios are not present here. The decision to settle was motivated by a lack of
assets sufficient to create a common fund for a class action. The terms of the
settlement agreement reflect this; Plaintiffs’ counsel did not receive attorney’s fees
and the Named Plaintiffs received modest consideration totaling less than $10,000.
{10} As for the potential impact of the settlement agreement on putative class
members, the settlement agreement provides that the release and the dismissal
with prejudice apply only to the Named Plaintiffs. The claims of other putative
class members are neither released nor dismissed.
{11} The Court therefore concludes that the parties are entitled to a dismissal.
NOW THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND
DECREED THAT:
{12} The settlement agreement is appropriate and not prejudicial to absent
putative class members; and
{13} The Named Plaintiffs’ claims are hereby DISMISSED with prejudice as to
Defendants, each party to bear their own costs, expenses, and attorney’s fees.
SO ORDERED, this the 22nd day of March, 2016.

/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Special Superior Court Judge
for Complex Business Cases