Market America, Inc. v. Christman-Orth

517 S.E.2d 645, 134 N.C. App. 234, 1999 N.C. App. LEXIS 759
CourtCourt of Appeals of North Carolina
DecidedJuly 20, 1999
DocketNo. COA98-1118
StatusPublished
Cited by1 cases

This text of 517 S.E.2d 645 (Market America, Inc. v. Christman-Orth) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Market America, Inc. v. Christman-Orth, 517 S.E.2d 645, 134 N.C. App. 234, 1999 N.C. App. LEXIS 759 (N.C. Ct. App. 1999).

Opinion

TIMMONS-GOODSON, Judge.

Robin Christman-Orth (defendant) appeals from an order granting summary judgment to Market America, Inc. (Market America) on defendant’s counterclaims for libel, slander, unfair trade practices, tortious interference with business relations, and restraint of trade. In addition, defendant challenges the trial court’s ruling which permitted Market America to amend its reply to include various affirmative defenses. Having judiciously examined the record before us, we affirm the order of the trial court.

Market America, a North Carolina corporation, is a multi-level product brokerage company which distributes approximately 300 consumer products through a network of approximately 75,000 independent distributors. The distributors earn money by purchasing products from Market America at wholesale prices and then selling those products to consumers at retail prices. Distributors also build sales organizations of other independent distributors and earn com[237]*237missions from training and managing those sales organizations. Market America’s distribution system is based on a binary matrix marketing plan whereby each distributor recruits, trains, and manages two sales organizations of other independent distributors.

Defendant is a citizen and resident of Pennsylvania. Prior to working for Market America, defendant operated a travel agency and worked as a regional sales representative for J&J Snack Food Corporation. On 18 March 1995, defendant executed an Independent Distributor Application and Agreement (the Agreement) with Market America defining the relationship between the company and its independent distributors. Under Paragraph 21 of the Agreement, defendant accepted the following terms:

I agree that the marketing plan, genealogy reports, distributor list and official literature are proprietary information and are considered trade secrets of the company as construed [in] N.C.G.S. § 66-152. I agree not to enter into competition with Market America by participating as a[n] Independent Contractor, consultant, officer, shareholder, director, employee or participant of another company or direct sales program using a similar matrix marketing structure or handling similar products to that of Market America or involving a Distributor of Market America in such a program for a period of six months from my written resignation or termination as an Independent Distributor of Market America. I agree that if I breach this covenant that Market America shall be entitled to a restraining order in a court of competent jurisdiction and I shall be liable to pay no less than $2,000.00 in damages per breach and legal cost.

When this lawsuit arose, defendant had not resigned, nor had she been terminated as an Independent Distributor of Market America.

Club Atlanta Travel, Inc. (CAT) is also a multi-level sales company using a binary marketing plan. CAT sells travel services such as vacations and airline flights. In September of 1996, defendant’s hus-rband became an independent distributor for CAT, and while defendant did not become a CAT distributor, she admittedly participated in marketing the company’s travel products and encouraged other Market America distributors to take advantage of CAT’s business opportunities. On 13 December 1996, general counsel for Market America sent a letter to defendant stating that her involvement with CAT’s commercial enterprise violated the terms of the Agreement. Defendant, through her attorney, replied that she had done nothing in [238]*238contravention of the Agreement by participating in the CAT venture, because CAT did not market any of the same products as did Market America. Defendant further indicated that she would continue to engage in CAT business.

On 29 January 1997, Market America filed a complaint against defendant seeking a temporary restraining order, a permanent injunction, and money damages for breach of contract and misappropriation of Market America’s trade secrets. A temporary restraining order requiring defendant to refrain from recruiting Market America distributors into other business ventures was issued that same day. On 7 February 1997, Market America’s President and Chief Executive Officer, J.R. Ridinger, sent a Follow-Up Bulletin (the bulletin) to Market America’s Advisory Counsel Members, which consisted of the company’s top twenty independent distributors, and the Certified Trainers, which consisted of approximately sixty-five independent distributors who were responsible for training other distributors. The bulletin stated that defendant was one of two individuals against whom Market America had prevailed in North Carolina’s courts. Although the bulletin mistakenly referred to the temporary restraining order against defendant as an injunction, a copy of the actual order was attached to and distributed with the bulletin.

On 8 April 1997, defendant filed an answer asserting, in addition to her defenses, counterclaims for (1) libel, (2) slander, (3) unfair trade practices under section 75-1.1 of the North Carolina General Statutes, (4) interference with business relations, (5) restraint of trade in violation of section 75-1 of the General Statutes, and (6) money owed in the amount of $200. The libel claim is based on the bulletin, which defendant contends defamed her by allegedly likening her to “termites,” “parasites,” and “vermin,” by stating that she “had been attempting to dissuade Distributors from Market America into CAT,” and by stating that Market America had obtained an injunction, as opposed to a temporary restraining order, against defendant.

The counterclaim for slander is based on two voicemail messages. The first message is one allegedly left by Scott Tucker, an independent distributor for Market America. According to defendant, Tucker contacted individuals within his business organization and stated that defendant was involved with CAT but would end such involvement within six months and go on to something else. The message also discouraged other distributors from becoming involved in CAT, stating that defendant was only motivated by self-interest and [239]*239greed. The second voicemail message is one allegedly left by Ridinger which supposedly “compared Defendant to members of the recently departed Heaven’s Gate cult in California.”

As to defendant’s unfair trade practices claim, she generally contends that Market America’s alleged libel of defendant and its attempt to enforce Paragraph 21 of the Agreement constituted unfair and deceptive acts or practices under section 75-1.1 of the General Statutes. Similarly, defendant’s counterclaim for interference with business relations alleges that Market America prevented people from doing business with defendant by threats and intimidation. Lastly, defendant’s claim for restraint of trade asserts that Market America had no legitimate business purpose for attempting to use Paragraph 21 of the Agreement to prevent defendant from entering into other business ventures which do not involve competing products.

Market America’s original reply, filed 10 June 1997, averred only that defendant’s counterclaims failed to state claims for relief. Then, on 7 May 1998, Market America filed a motion to amend its reply to add several affirmative defenses, including (1) truth, (2) qualified privilege, and (3) lack of effect on any North Carolina business operations of defendant. Plaintiff moved for summary judgment as to defendant’s counterclaims on 22 May 1998. Both motions were heard on 1 June 1998, and on 2 June 1998, the trial court entered an order granting the motions.

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Related

Market America, Inc. v. Christman-Orth
520 S.E.2d 570 (Court of Appeals of North Carolina, 1999)

Cite This Page — Counsel Stack

Bluebook (online)
517 S.E.2d 645, 134 N.C. App. 234, 1999 N.C. App. LEXIS 759, Counsel Stack Legal Research, https://law.counselstack.com/opinion/market-america-inc-v-christman-orth-ncctapp-1999.