IN THE SUPREME COURT OF NORTH CAROLINA

No. 279A19

Filed 14 August 2020

GLOBAL TEXTILE ALLIANCE, INC., Plaintiff

v.

TDI WORLDWIDE, LLC, DOLVEN ENTERPRISES, INC., TIMOTHY DOLAN, 

individually and in his capacity as an officer, shareholder and director of Dolven 

Enterprises, Inc. and an officer and owner of TDI Worldwide, LLC; JAMES DOLAN, 

individually and in his capacity as an officer, shareholder and director of Dolven 

Enterprises, Inc., STEVEN GRAVEN, individually and in his capacity as an officer, 

shareholder and director of Dolven Enterprises, Inc., RYAN GRAVEN, individually 

and in his capacity as an officer, shareholder and director of Dolven Enterprises, Inc.,

GARRETT GRAVEN, individually, GFY INDUSTRIES LIMITED, GFY, LIMITADA 

de CAPITAL VARIABLE, GFY COOPERATIVE, U.A., 上海冠沣源贸易有限公司 a/k/a 

GFY SH, and FRESH INDUSTRIES, LTD., Defendants

Appeal pursuant to N.C.G.S. § 7A-27(a)(3) from the order compelling discovery

entered on 26 February 2019 by Judge Gregory P. McGuire, Special Superior Court 

Judge for Complex Business Cases, in Superior Court, Guilford County, after the case 

was designated a mandatory complex business case by the Chief Justice pursuant to 

N.C.G.S. § 7A-45.4(b). Heard in the Supreme Court on 16 June 2020.

Hagan Barrett PLLC, by J. Alexander S. Barrett, Charles T. Hagan III, and 

Kurt. A. Seeber, and Akin Gump Strauss Hauer & Feld LLP, by Stanley E. 

Woodward, Jr., for plaintiff-appellant.

Ellis & Winters LLP, by Jon Berkelhammer, Steven A. Scoggan, and Scottie 

Forbes Lee, for defendant-appellee Steven Graven, K&L Gates LLP, by A. Lee 

Hogewood III, John R. Gardner, and Matthew T. Houston, for defendantappellees Dolven Enterprises, Inc., Ryan Graven, and GFY Cooperative, U.A., 

James McElroy & Diehl, P.A., by Fred B. Monroe and Jennifer M. Houti, for 

defendant-appellees TDI Worldwide, LLC and Timothy Dolan, Morningstar 

Law Group, by Shannon R. Joseph and Jeffrey L. Roether, for defendantappellee Garrett Graven, and Brooks, Pierce, McLendon, Humphrey & Leonard 

LLP, by Eric M. David and Shepard D. O’Connell, for defendant-appellee 
GLOBAL TEXTILE ALLIANCE, INC. V. TDI WORLDWIDE, LLC, ET AL.

Opinion of the Court

James Dolan. 

NEWBY, Justice.

This case is about whether a one-hundred percent shareholder of a corporation 

is that corporation’s alter ego for the purposes of privilege against discovery. 

Specifically, we must decide whether communications with someone who is an agent 

of the sole shareholder, but not of the corporation, fall under the corporation’s 

attorney-client privilege or the work-product doctrine. They do not. Once a corporate 

form of ownership is properly established, the corporation is an entity distinct from 

the shareholder, even a shareholder owning one-hundred percent of the stock. An 

agent of the shareholder is not automatically an agent of the corporation. We also 

must decide whether the Business Court should have conducted an exhaustive in 

camera review of all relevant communications, even though plaintiff invited the court 

to conduct a more limited review of a sample of documents. The Business Court’s 

limited review in this case was appropriate. Because the Business Court did not 

abuse its discretion either by ordering production of the relevant communications or 

by conducting a limited review of those communications, that court’s decision is 

affirmed.

Global Textile Alliance, Inc. (GTA), the sole plaintiff, is a North Carolina 

corporation with its principal place of business in Reidsville, North Carolina. Luc 

Tack is GTA’s only shareholder. Remy Tack, Luc Tack’s son, is GTA’s Chief Executive 

Officer. As a corporation, GTA is governed by a board of directors. GTA filed this 
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Opinion of the Court

lawsuit in the Business Court against defendants, alleging that defendants engaged 

in several improper acts during the formation and operation of Dolven Enterprises, 

Inc.

During discovery, defendants asked GTA to identify Stefaan Haspeslagh as a 

custodian required to provide electronically stored information (ESI). Haspeslagh is 

Luc Tack’s longtime friend, financial advisor, and advisor to some of Luc Tack’s 

businesses. GTA did not comply with defendants’ request, asserting that Haspeslagh 

is not an employee, officer, or director of GTA. Both Luc Tack and Remy Tack testified 

that Haspeslagh has no role with GTA and that Haspeslagh has not advised GTA 

about this lawsuit.

On 24 July 2018 the Business Court heard oral argument on the custodial

issue. GTA’s counsel argued that Haspeslagh was “a third-party consultant not 

retained by GTA, [but] retained by the Tacks.” Based on this assertion, the Business 

Court determined that Haspeslagh was not a custodian of GTA documents. Thus, it 

did not require GTA to name Haspeslagh as a custodian required to provide 

defendants with ESI during discovery.

Months later, GTA produced a privilege log that identified categories of 

documents that GTA had withheld from defendants during discovery. One category 

of documents was described as “[c]onfidential correspondence between GTA and/or 

its outside counsel and Stefaan Haspeslagh conveying and/or summarizing legal 

advice regarding the matters giving rise to the instant litigation.” GTA claimed that 
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Opinion of the Court

these communications were protected on the grounds of the attorney-client privilege 

and the work-product doctrine. GTA’s attorneys instructed witnesses not to answer 

questions about their discussions with Haspeslagh.

Defendant Steven Graven filed a motion with the Business Court to compel 

GTA to produce the communications involving Haspeslagh and to instruct the 

witnesses to answer questions about their discussions with Haspeslagh. Defendant 

argued that GTA waived the attorney-client privilege by including Haspeslagh on 

communications with GTA’s counsel.

GTA responded that its attorney-client privilege extends to communications 

involving Haspeslagh. It argued that Haspeslagh is GTA’s agent because Luc Tack is 

GTA’s sole shareholder and because Haspeslagh works for some of Luc Tack’s 

businesses. GTA also asserted privilege on two other special bases: (1) Haspeslagh is 

the functional equivalent of Luc Tack’s employee, and (2) communications with 

Haspeslagh are privileged under the Kovel doctrine.

The motion to compel was submitted to a special discovery master. The special 

master heard oral argument on 5 February 2019, and on 7 February 2019 

recommended that the Business Court grant defendant’s motion to compel.

The Business Court conducted a de novo review of the special master’s 

recommendation. As part of its review, the Business Court asked GTA to submit all 

disputed documents for in camera review. GTA responded that it would “gather the 

correspondence as requested and submit the documents.” When GTA failed to 
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Opinion of the Court

produce the documents promptly, the Business Court requested that GTA provide a 

timeframe for the documents’ production. GTA responded that it “hoped to review the 

[documents] before providing them to the Court” and that it wanted more time to do 

so. The Business Court accommodated GTA by instead allowing it to submit “a 

reasonable sampling of such communications.” GTA agreed and submitted twelve 

emails involving Haspeslagh for in camera review. After this review, GTA did not ask 

the Business Court to review additional documents.

On 26 February 2019 the Business Court issued an order granting the motion 

to compel. GTA filed a motion for reconsideration with the Business Court. In its brief 

supporting the motion for reconsideration, GTA quoted selected portions from the 

allegedly privileged materials. After denial of its motion for reconsideration, GTA

appealed to this Court.

GTA raises three issues on appeal. First, GTA argues that the Business Court 

erred by determining that communications involving Haspeslagh are not protected 

by the attorney-client privilege. Second, it argues that the Business Court erred by

determining that communications involving Haspeslagh are not protected under the 

work-product doctrine. Third, it argues that the Business Court erred by not 

conducting an exhaustive in camera review of all communications involving 

Haspeslagh. Because we conclude that the Business Court did not abuse its discretion 

regarding any of these issues, we affirm. 

First, the Business Court did not abuse its discretion by determining that 
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communications involving Haspeslagh are not privileged under the attorney-client 

privilege. This Court reviews a trial court’s application of the attorney-client privilege 

for abuse of discretion. Friday Invs., LLC v. Bally Total Fitness of the Mid-Atl., Inc., 

370 N.C. 235, 241, 805 S.E.2d 664, 669 (2017). As the party asserting the attorneyclient privilege, GTA has the burden of establishing that privilege. See State v. 

McNeill, 371 N.C. 198, 240, 813 S.E.2d 797, 824 (2018). Communications do not merit 

the attorney-client privilege when they are made in the presence of a third party. 

State v. Murvin, 304 N.C. 523, 531, 284 S.E.2d 289, 294 (1981). GTA has asserted 

several arguments that communications including Haspeslagh are protected under 

the attorney-client privilege. In essence, each of GTA’s arguments improperly treat 

Haspeslagh as an agent of GTA who merits protection under the attorney-client 

privilege for conversations with GTA’s attorneys.

GTA argues that Luc Tack and GTA are the same entity for the purpose of 

establishing the applicability of the attorney-client privilege; in other words, that 

GTA is Tack’s alter ego. This argument ignores clearly established North Carolina 

corporate law. This Court has long acknowledged that “[a] corporation is an entity 

distinct from the shareholders which own it.” Bd. of Transp. v. Martin, 296 N.C. 20, 

28, 249 S.E.2d 390, 396 (1978) (citing Troy Lumber Co. v. Hunt, 251 N.C. 624, 627, 

112 S.E.2d 132, 134 (1960)). Even a corporation owned by a “single individual” is a 

distinct entity from its shareholder. Id. at 28–29, 249 S.E.2d at 396 (citing Huski-Bilt, 

Inc. v. Trust Co., 271 N.C. 662, 669–670, 157 S.E.2d 352, 358 (1967); Acceptance Corp. 
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v. Spencer, 268 N.C. 1, 8–9, 149 S.E.2d 570, 575–576 (1966)). This rule ensures that 

a shareholder who forms a corporation “to secure its advantages” cannot “disregard 

the existence of the corporate entity” to avoid its disadvantages. Martin, 296 N.C. at 

29, 249 S.E.2d at 396. We decline to overturn this long-established precedent, which 

has informed North Carolina corporate law for over half a century. And GTA has not 

shown that circumstances exist which would require a court to disregard the 

corporate form. Accordingly, at best, Haspeslagh is Luc Tack’s agent as to some of 

Tack’s personal affairs, but Haspeslagh is not GTA’s agent. The corporation could 

have made Haspeslagh its agent, but it did not do so. Regarding the custodian issue, 

GTA had specifically argued to the trial court that Haspeslagh had no role with 

respect to GTA. Because Haspeslagh is not GTA’s agent, the Business Court did not 

abuse its discretion by concluding that GTA does not merit the attorney-client 

privilege for conversations which included Haspeslagh. 

GTA’s argument for specialized applications of the attorney-client privilege 

likewise fails because Haspeslagh is not GTA’s agent. GTA claims that 

communications involving Haspeslagh are entitled to protection under the 

“functional[-]equivalent” test or, in the alternative, the Kovel doctrine. See In re Bieter 

Co., 16 F.3d 929, 939 (8th Cir. 1994) (establishing the functional-equivalent test for 

federal courts in the Eighth Circuit); United States v. Kovel, 296 F.2d 918, 921–22 (2d 

Cir. 1961) (establishing the Kovel doctrine for federal courts in the Second Circuit). 

Neither of these specialized applications has been recognized under North Carolina 
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law. See, e.g., Technetics Grp. Daytona, Inc. v. N2 Biomedical, LLC, No. 17 CVS 

22738, 2018 WL 5892737, *3–5 (N.C. Bus. Ct. Nov. 8, 2018).

Yet, even if these specialized attorney-client privilege applications were 

recognized under North Carolina law, the Business Court did not abuse its discretion 

by determining that these specialized applications do not apply in this case. Under 

the functional-equivalent test, an individual is the functional equivalent of a 

company’s employee when his communications with counsel “fell within the scope of 

his duties” for the company. In re Bieter Co., 16 F.3d at 940. This specialized 

application does not apply because Haspeslagh lacks any sort of agency relationship 

with GTA and thus cannot have “duties” at GTA. 

Under the Kovel doctrine, communications involving a third party are 

privileged when the communications are “necessary, or at least highly useful, for the 

effective consultation between the client and the lawyer which the privilege is 

designed to permit.” Kovel, 296 F.2d at 922. GTA does not argue that Haspeslagh’s 

presence was necessary for GTA to communicate with its attorneys; rather, GTA 

argues that Haspeslagh’s presence was highly useful for Luc Tack to communicate 

with GTA’s attorneys. This argument, again, improperly assumes that Tack and GTA 

are the same entity. Therefore, communications involving Haspeslagh are not 

protected under either specialized application GTA requests.

Because GTA would not merit privilege even if these specialized applications 

of the attorney-client privilege were recognized under North Carolina law, this Court 
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Opinion of the Court

need not and does not address whether these specialized applications should be

recognized under North Carolina law. Therefore, the Business Court did not abuse 

its discretion by determining that GTA does not merit a specialized application of the 

attorney-client privilege under the functional-equivalent test or Kovel doctrine.1

Next, the Business Court did not abuse its discretion by determining that 

communications involving Haspeslagh are not protected under the work-product 

doctrine. The work-product doctrine only protects communications when they are

“prepared in anticipation of litigation” by a person acting as a company’s “consultant 

. . . or agent.” N.C.G.S. § 1A-1, Rule 26(b)(3) (2019); see also Willis v. Duke Power Co., 

291 N.C. 19, 35–36, 229 S.E.2d 191, 201 (1976). Here, Haspeslagh has no role at GTA

and has not been retained by GTA to work on this lawsuit. Indeed, Luc and Remy 

Tack both testified that Haspeslagh did not advise GTA about this lawsuit at all. 

Communications involving Haspeslagh therefore cannot be said to have been 

“prepared in anticipation of litigation” by Haspeslagh acting as GTA’s consultant or 

agent. The Business Court did not abuse its discretion by determining that GTA does 

not merit protection under the work-product doctrine for the communications 

involving Haspeslagh.

Finally, the Business Court did not abuse its discretion by not conducting an 

exhaustive in camera review of all communications involving Haspeslagh for which 

 

1 Because we hold that no privilege exists protecting the disputed documents from 

discovery, we need not address defendants’ argument that GTA waived its right to assert 

such a privilege.
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Opinion of the Court

GTA sought protection. GTA cannot assert any argument for exhaustive in camera

review because it failed to promptly provide all documents necessary for a full review,

and because it welcomed a more limited one. When the appellant fails to raise an 

argument at the trial court level, the appellant “may not . . . await the outcome of the 

[trial court’s] decision, and, if it is unfavorable, then attack it on the ground of 

asserted procedural defects not called to the [trial court’s] attention.” Nantz v. Emp’t 

Sec. Comm’n, 28 N.C. App. 626, 630, 222 S.E.2d 474, 477, aff’d, 290 N.C. 473, 484,

226 S.E.2d 340, 347 (1976).

Here GTA challenges the Business Court’s decision to adopt a limited in 

camera review procedure instead of an exhaustive in camera review procedure,

apparently because the Business Court’s ruling that came after that limited review 

is unfavorable to GTA. Significantly, the Business Court adopted this limited review 

to accommodate GTA. The court initially proposed an exhaustive in camera review, 

but GTA indicated that it needed more time for an internal review before it would 

comply. The Business Court then permitted GTA to submit a “reasonable sampling” 

of the documents for a limited in camera review as an accommodation to GTA. GTA 

agreed to this procedure and submitted twelve emails for review. After the limited

review, GTA did not ask the Business Court for a more exhaustive review. Because 

GTA did not promptly comply with the court’s request as necessary for an exhaustive 

review, and because the Business Court’s limited review was an accommodation 

which GTA welcomed, GTA cannot now claim that the Business Court’s 
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accommodation constitutes reversible error.

Even if GTA could properly raise an in camera review argument, the Business 

Court did not abuse its discretion by conducting a limited in camera review. A trial 

court acting in its discretion may require an in camera review of documents to assist 

in ascertaining whether certain materials are entitled to privileged status. Duke 

Power Co., 291 N.C. at 36, 229 S.E.2d at 201; see also In re Miller, 357 N.C. 316, 336–

37, 584 S.E.2d 772, 787 (2003). Though this Court has not directly addressed the issue 

of limited in camera reviews, courts in this state and around the nation have 

consistently permitted limited in camera reviews as a substitute for exhaustive in 

camera reviews. See, e.g., In re Vioxx Prods. Liab. Litig., Nos. 06-30378, 06-30379, 

2006 WL 1726675, at *3 (5th Cir. May 26, 2006); Wachovia Bank, National Ass’n v. 

Clean River Corp., 178 N.C. App. 528, 531–32, 631 S.E.2d 879, 882 (2006). In Clean 

River Corporation, our own Court of Appeals rejected an argument claiming that the 

trial court had abused its discretion because the “[a]ppellants could have, but chose 

not to, produce the documents for in camera inspection.” 178 N.C. App. at 532, 631 

S.E.2d at 882. We find that court’s reasoning persuasive here because GTA asserts 

that the Business Court erred by accommodating GTA with a limited in camera

review instead of an exhaustive review, which the Business Court originally intended 

to conduct. Both limited and exhaustive reviews were thus within the Business 

Court’s discretion.

Furthermore, the fundamental issue presented to the Business Court was 
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Opinion of the Court

whether communications which included Haspeslagh were privileged. The Business 

Court properly considered the twelve emails GTA selected for its consideration as 

well as the other evidence. It determined, as previously discussed, that no privilege 

exists. Therefore, the court had no need to review additional emails.

In sum, we hold that the Business Court did not abuse its discretion by 

determining that GTA’s conversations in which Haspeslagh participated do not merit 

protection under the attorney-client privilege or the work-product doctrine. Nor did 

the Business Court abuse its discretion by conducting a limited in camera review of 

the contested communications. The decision of the Business Court is affirmed.

AFFIRMED.