OPINIONS

Continued From Page 19 to strong government interests to survive First Amendment scrutiny. However, plaintiff has not sufficiently alleged that the defendant-officers violated a clearly established right, so the officers are entitled to qualified immunity.

We affirm the district court’s grant of the officers’ motion to dismiss, but we vacate the grant of the defendant-town’s motion to dismiss.

The plaintiff-passenger has alleged that the town has a policy that prohibits an occupant from livestreaming their own traffic stop. And plaintiff’s allegation is plausible.

He supports his allegation by asserting: (1) defendant Officer Myers Parker Helms (sued in both his official and individual capacities) tried to seize his phone upon learning plaintiff was streaming to Facebook Live; (2) Officer William Blake Ellis (sued in his official capacity only) said that in the future if plaintiff broadcasts on Facebook Live his phone will be taken from him and, if plaintiff refuses to give up his phone, he will go to jail; and (3) both officers justified their efforts to prevent livestreaming using the same officer-safety rationale. It is a reasonable inference that absent a policy the two officers would not have taken the same course, for the same reason, nor would those officers have known in advance that plaintiff would face the same treatment if he tried to livestream another officer in the future.

Furthermore, recording police encounters creates information that contributes to discussion about governmental affairs. So too does livestreaming disseminate that information, often creating its own record. We thus hold that livestreaming a police traffic stop is speech protected by the First Amendment.

The town’s speech regulation only survives First Amendment scrutiny if defendants demonstrate that (1) the town has weighty enough interests at stake, (2) the policy furthers those interest and (3) the policy is sufficiently tailored to furthering those interests.

The town purports to justify the policy based on officer safety. According to defendants, livestreaming a traffic stop endangers officers because viewers can locate the officers and intervene in the encounter. They support this claim by arguing that violence against police officers has been increasing—including planned violence that uses new technologies. In defendants’ view, banning livestreaming prevents attacks or related disruptions that threaten officer safety.

Even though the town has a strong interest in protecting its officers, defendants have not done enough to show that this policy furthers or is tailored to that interest. Nor is that gap filled here by common sense or caselaw. At this stage, plaintiff has plausibly alleged that the town adopted a livestreaming policy that violates the First Amendment.

Qualified Immunity

The First Amendment right here is a passenger’s alleged right to livestream their own traffic stop. There is no controlling authority in this jurisdiction that establishes plaintiff had this right when his car was pulled over.

In addition, none of plaintiff’s out-of-jurisdiction case citations address a passenger livestreaming a police officer during their own traffic stop. Instead, they generally are about video recordings, not livestreams, and the people doing the recording tend to be bystanders, not the subjects of the stop itself.

A different balance is struck when an officer prevents a bystander from recording someone else’s traffic stop than when the officer prevents a passenger from livestreaming their own stop. Without a consensus of cases barring the latter, plaintiff cannot show that a reasonable official in Officer Helms’s shoes would understand that his actions violated the First Amendment. Consequently, the district court was correct to dismiss the 42 U.S.C. § 1983 claim against Officer Helms in his individual capacity.

Vacated in part, affirmed in part, and remanded.

Sharpe v. Winterville Police Department (Lawyers Weekly No. 001-013-23, 23 pp.) (Julius Richardson, J.) (Paul Niemeyer, J., concurring) No. 21-1827. Appealed from USDC at Raleigh, N.C. (James Dever, J.) Andrew Tutt, Greg Doucette, Jing Wang, John Freedman, David McMullen and Isaac Ramsey for appellant; Dan Hartzog and Katherine Barber-Jones for appellees; Joseph Michael McGuinness, Lauren Bonds, Christopher Mills, David Milton, Victoria Clark, William Aronin, Vera Eidelman, Carl Takei, Irena Como, Kristi Graunke, Mickey Osterreicher, Alicia Wagner Calzada, Lin Weeks, Gabriel Rottman, Ian Kalish, Sarah Ludington, Megan Iorio, Jake Weiner, Sophia Cope, Mukund Rathi, Clark Neily and Jay Schweikert for amici curiae. 4th Cir.

Contract

Revolving Credit – Attorney’s Fees –N.C. Law

Despite conflicting lines of cases from North Carolina’s intermediate appellate court, we read G.S. § 6-21.2(1) and (2) as they are written and uphold the district court’s award of attorney’s fees to the plaintiff-lender in an amount equal to 15 percent of the outstanding balance of the defaulted loan.

We affirm summary judgment for the lender.

Mitigation & Obstruction

The defendant-borrower does not contest the fact that it defaulted on its revolving credit account (revolver) with the lender. The borrower asserted defenses, arguing that the lender failed to mitigate its damages and obstructed the borrower’s contract performance by declining to approve several third-party financing options. However, the borrower only proffered vague testimony from its majority shareholder, Greg Lindberg, with no details about these financing proposals.

This lack of detail matters. Under North Carolina law, the burden is on the breaching party (here, the borrower) to prove that the nonbreaching party (here, the lender) failed to exercise reasonable diligence to minimize the loss.

To avoid summary judgment, the borrow-

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Continued From Page 20 er needed to raise triable issues about whether any of the purported financing offers could have prevented a breach, mitigated damages, or enabled repayments and whether the offers’ terms were sufficiently favorable that it would have been unreasonable or wrongful for the lender to withhold its approval. The borrower failed to do so.

Attorney’s Fees

In North Carolina, a prevailing party is not entitled to attorneys’ fees unless expressly authorized by statute. As relevant here, G.S. § 6-21.2 makes “[o]bligations to pay attorneys’ fees upon any . . . evidence of indebtedness . . . valid and enforceable . . . subject to” certain “provisions” set forth in the rest of the statute. This case requires us to interpret the relationship between two of those provisions.

The first—Subsection 1—addresses circumstances where the “evidence of indebtedness provides for attorneys’ fees in some specific percentage of the ‘outstanding balance.’” § 6-21.2(1). In that situation, “such provision and obligation shall be valid and enforceable up to but not in excess of fifteen percent of said ‘outstanding balance’ owing on said note, contract or other evidence of indebtedness.”

Subjection 2, in contrast, applies if the “evidence of indebtedness provides for the payment of reasonable attorneys’ fees by the debtor, without specifying any specific percentage.” § 6-21.2(2). In that case, “such provision shall be construed to mean fifteen percent of the ‘outstanding balance’ owing on said note, contract or other evidence of indebtedness.”

Though the North Carolina Court of Appeals has varying lines of cases construing this statutory language, the state Supreme Court has not reconciled them. We predict that the high court would give effect to the plain meaning of the statute.

This statute’s plain words divide the world into two types of fee-shifting provisions: those that “provide for attorneys’ fees in some specific percentage of the ‘outstanding balance’” and those that “provide for the payment of reasonable attorneys’ fees . . . without specifying any specific percentage.” § 6-.21.2(1)–(2). Because the revolver provides for “the reasonable fees, charges and disbursements of outside counsel and the allocated cost of inside counsel,” without mentioning any specific percentage, it is governed by Subsection 2. Subsection 2, in turn, provides the revolver “shall be construed to mean” that Academy is required to pay “fifteen percent of the ‘outstanding balance’” as attorneys’ fees.

It is well established in North Carolina that the word “shall” is generally imperative or mandatory, and here the inference is strengthened by the legislature’s use of “up to but not in excess of fifteen percent” in the directly neighboring Subsection 1. The district court thus did not err in imposing a 15 percent fee award.

Affirmed.

Colorado Bankers Life Insurance Co. v. Academy Financial Assets, LLC (Lawyers Weekly No. 001-020-23, 13 pp.) (Toby Heytens, J.) No. 22-1104. Appealed from USDC at Raleigh, N.C. (James Dever, J.) Matthew Nis Leerberg, Matthew KruegerAndes and Aaron Tobin for appellant; Lauren Elizabeth Fussell, Camden Webb and Alexander Gormley for appellee. 4th Cir.

Corporate

Records Request – Affiliated Company – Board of Directors –Voting Agreement

Although the Delaware charter of defendant Cycle Labs, Inc., gives a North Carolina company (defendant Cycle Holdings, Inc.) the voting power to elect a majority of Cycle Labs’ directors (i.e., three of the five directors), a voting agreement between Cycle Holdings and a new investor in Cycle Labs restrains the way Cycle Holdings may vote as to one of those three seats. Since the voting agreement is valid under Delaware law, Cycle Holdings no longer has the authority to elect a majority of Cycle Labs’ directors. As a result, plaintiff, as a qualified shareholder of Cycle Holdings, no longer has the right under G.S. § 55-16-02 to inspect the records of Cycle Labs.

The court grants partial summary judgment for defendants.

G.S. § 55-16-02(h) provides, “A qualified shareholder of a corporation that has the power to elect, appoint, or designate a majority of the directors of another domestic or foreign corporation . . . has the inspection rights provided in this section with respect to the records of that other corporation.”

Plaintiff, a qualified shareholder of Cycle Holdings, seeks to inspect the records of Cycle Labs pursuant to § 55-16-02(h). At issue is whether – after entering into the voting agreement with a new investor –Cycle Holdings still has the authority to elect a majority of Cycle Labs’ directors. The voting agreement requires Cycle Holdings to use its voting power to elect the Cycle Labs CEO to one of the three board seats that the Cycle Labs charter gives Cycle Holdings the authority to fill.

The parties agree that Delaware law controls the validity of the voting agreement.

Plaintiff argues that the voting agreement is an invalid attempt to restrict Cycle Holdings’ unfettered right to elect a majority of Cycle Labs’ directors as guaranteed in Cycle Labs’ certificate and that any such change in Cycle Holdings’ rights with regard to the composition of the board could only be effectuated through an amendment to the certificate itself.

However, voting agreements are expressly authorized under the Delaware General Corporation Law, and the Delaware Supreme Court has made clear that shareholders possess significant flexibility in entering into such agreements.

Neither the parties’ briefs nor the court’s research has disclosed any case in which a Delaware court has actually held that a shareholder voting agreement was invalid because it conflicted with the company’s charter. Nevertheless, the reasoning of In re Westech Cap. Corp., 2014 Del. Ch. LEXIS 92 (Del. Ch. May 29, 2014), and Klaassen v. Allegro Dev. Corp., 2013 Del. Ch. LEXIS 247 (Del. Ch. September 27, 2013), compels a ruling in favor of defendants. These cases demonstrate the critical distinction recognized under Delaware law between (1) an agreement that expressly takes away a power granted to a shareholder in the com-

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