News Article

The three-year legal battle concerning economic incentives provided to Dell, Inc., for a Winston-Salem computer manufacturing plant is over and Dell has emerged victorious.

On Friday, April 11th, 2008, the North Carolina Supreme Court dismissed an appeal in a lawsuit against Dell, represented by Womble Carlyle attorneys Burley Mitchell, Press Millen and Sean Andrussier. The Supreme Court’s decision effectively is the final step in the appeals process. In its decision, the Supreme Court ruled that there were no sufficient grounds to reconsider a case that already had been decided in Dell’s favor by two lower courts.

"We are pleased with the Supreme Court's ruling," Mitchell said. "The Dell case could have had major ramifications on the future of economic incentives in the state. Had the plaintiffs been successful, North Carolina’s ability to compete economically with other states would have been severely compromised. Instead, state and local lawmakers will continue to be able to use this tool to recruit new jobs to North Carolina."

Dell received a combined incentives package from the State, the City of Winston-Salem and Forsyth County to build the 750,000-square-foot factory that has the potential to be worth around $280 million to the company if it meets all of the targets outlined in its agreements with the governmental entities. Securing the facility has brought more than a thousand high-paying jobs to the region and provided a significant boost to the local tax base.

Mitchell, a former Chief Justice of the N.C. Supreme Court, Millen and Andrussier have successfully defended the computer manufacturer at all stages in a case filed against the $280 million incentives package provided by the State of North Carolina. Seven North Carolina residents, represented by an organization called the North Carolina Institute for Constitutional Law, challenged the incentives in a 2005 lawsuit, claiming the incentives package violated the state’s Constitution.

In May 2006, the case was heard in Wake County Superior Court and Dell earned a complete victory. Judge Robert Hobgood dismissed all of the 22 separate claims asserted by the plaintiffs. In his reply, Judge Hobgood ruled that, "attracting jobs to a community by public economic incentives provides a direct economic welfare and benefit to the people of those communities." He also noted that the State Supreme Court has upheld the legality of incentives in the past.

Hobgood said future challenges to the constitutionality of such incentives were political questions better left with the state legislature, not the courts.

The plaintiffs appealed the decision. But in October, 2007, the North Carolina Court of Appeals unanimously upheld the Wake County Superior Court ruling, rejecting each of the plaintiff's 22 challenges.

The Appeals Court held that "every state provides tax and other economic incentives as an inducement to local industrial location and expansion" and, repeating the lower court’s assessment, stated that questions about the wisdom of particular incentives were properly for the legislature and not the courts. The court found that the Dell incentives (and incentives generally) serve the public and therefore do not violate the public purpose clause of the North Carolina Constitution.

Click here to read the Court of Appeals opinion.

About Burley Mitchell
Justice Mitchell retired as the Chief Justice of the North Carolina Supreme Court to head Womble Carlyle's appellate advocacy and government relations groups. He is a co-author of the NC Appellate Blog. 

About Press Millen
Press is a trial attorney who has litigated a wide variety of antitrust and other complex business cases, including class actions, in federal and state courts throughout the United States. He has represented clients in numerous industries including pharmaceuticals, software, telecom, and retail.

About Sean Andrussier
Sean focuses his practice on constitutional law, appellate practice and procedure, and providing strategic counseling for clients embroiled in complex commercial litigation. He is a co-author of the NC Appellate Blog.