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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
KELLY K. SUGGS JACOBS and Persons Similarly Situated, Plaintiff,
v. PHYSICIANS WEIGHT LOSS CENTER OF AMERICA, INC., CHARLES E.
SEKERES, CECILE HOLDEN, JOHN D. SIDERIS, PAUL C. HUNT, JEAN
THOMAS, COOKIE PARKER, G.A. PARKER, HEALTHY WEIGH, INC., P.C.H.
TODAY, INC., and VIRGINIA EVELYN DOREMUS, Defendants
Filed: 18 October 2005
1. Fiduciary Relationship_weight loss center_retained physicians_weight loss drug
prescriptions_customer's choice of pharmacy rights_breach of fiduciary duty
A fiduciary relationship existed between customers of a weight loss center and physicians
retained by the center to examine its customers and to prescribe weight loss drugs for them, and
this relationship could give rise to liability by the center for breach of fiduciary duty based upon
the failure of the retained physicians to disclose to the customer-patients that they had a right to
obtain and fill their prescriptions at an outside pharmacy rather than through the center's
designated pharmacy whether or not they had requested that they be given their prescriptions so
that they could be filled at an outside pharmacy.
2. Wrongful Interference_physician-patient relationship
North Carolina does not recognize a cause of action for tortious interference with a
3. Fraud; Unfair Trade Practices_right to obtain prescriptions_failure to
disclose_partial summary judgment
Genuine issues of material fact existed in actions for constructive fraud and unfair trade
practices as to whether plaintiff weight loss center customers would have exercised their right to
obtain their weight loss drug prescriptions and have them filled at outside pharmacies if they had
been informed of their right to do so, and the trial court erred by entering partial summary
judgment for defendant as to plaintiffs who did not request their prescriptions.
4. Pharmacists_pharmacy of choice statute_inapplicability to weight loss contracts
The pharmacy of choice statute, N.C.G.S. § 58-51-37, governs accident and health
insurance policies and similar contracts and does not apply to contracts for medical and other
services such as the contracts between defendant weight loss center and its clients which provided
that the center would fill prescriptions for weight loss drugs through a pharmacy with which the
center had contracted.
5. Physicians and Surgeons_statute prohibiting referrals to certain entities_no private
right of action
The statute that prohibits health care providers from referring patients to entities in which
the health care provider is an investor, N.C.G.S. § 90-406, does not provide a private right of
action for clients of a weight loss center whose contracts require them to have drug prescriptions
written by the center's retained physicians filled by a pharmacy with which the center has
6. Drugs_RICO claim_weight loss center_prescription drug agreement_not sale of
A customer of defendant weight loss center failed to establish a RICO claim with regard to
a contract requiring customers of the center to have weight loss drug prescriptions written by the
center's retained physicians filled through a specific Ohio pharmacy where the evidence showed
that local weight loss center franchises were paid by customers for the service of forwarding
prescriptions to the Ohio pharmacy to be processed, and this evidence does not support a
conclusion that defendant violated N.C.G.S. § 89-95(a)(1) by engaging in the sale of controlled
substances or that defendant engaged in mail fraud or wire fraud involving the distribution of
7. Class Actions_decertification of class_numerosity
The trial court erred by decertifying the class of plaintiffs based upon the lack of
numerosity where several of the trial court's summary judgment rulings as to certain of the
plaintiffs have been reversed and the class remains as previously defined by another judge's order
certifying the class.
8. Appeal and Error_preservation of issues_arguments not presented to trial court
Arguments raised for the first time on appeal regarding whether the class of plaintiffs
should be decertified will not be considered by the appellate court.
Appeal by plaintiff and defendants from judgment entered 5
March 2004 by Judge Ben F. Tennille in Guilford County Superior
Court. Heard in the Court of Appeals 12 January 2005.
Barron & Berry, L.L.P., by Frederick L. Berry, and Clark Bloss
& Wall, PLLC, by John F. Bloss, for plaintiff-appellant.
Parker, Poe, Adams & Bernstein, L.L.P., by Harvey L. Cosper,
Jr., and Lori R. Keeton, for defendants-appellees.
Kelly Suggs Jacobs (plaintiff) appeals an order of the trial
court granting summary judgment for Physicians Weight Loss Center
(PWLC), et al., (hereinafter referred to collectively as
defendants), and denying her motion for summary judgment.
Defendants appeal the trial court's grounds for decertifying theclass of plaintiffs. For the reasons stated herein, we affirm in
part and reverse in part the trial court's order.
The factual and procedural history of this case is as follows:
PWLC provides services that enable weight loss, including dietary
and prescription drug therapy. PWLC has North Carolina franchise
operations located in Asheville, Greensboro, Jacksonville,
Wilmington, and Winston-Salem. PWLC franchises contracted with
physicians to examine and treat customers enrolled in its weight
loss programs. Physicians under contract with PWLC prescribed drugs
for PWLC customers. Pursuant to their contract with PWLC, the
physicians were prohibited from providing the prescriptions directly
to the patients. Instead, the prescriptions were faxed to Colonial
Pharmacy in Ohio for processing. Colonial Pharmacy filled the
prescriptions and mailed the drugs to the patient's residence.
Customers paid the local PWLC franchise for the drug. The
franchisee paid the corporate office for the cost of the drug. The
corporate office paid Colonial Pharmacy for filling the
prescriptions and mailing the drugs to the customers. The local
franchise received the difference between what the customer paid for
the prescription and the cost to the corporate office as profit.
In March 1998, plaintiff executed a contract for the purchase
of a weight loss plan from defendants. The plan included
prescription drug therapy. After purchasing a two-week supply of
the prescription drug Merida through defendants, plaintiff learned
she could reap substantial cost savings by purchasing the drug from
a local pharmacy. Plaintiff requested her prescription from thePWLC contract doctor but her request was denied pursuant to PWLC
Plaintiff filed the underlying action because PWLC refused to
provide her a prescription to take to an outside pharmacy. In its
amended form, the complaint alleges that defendants engaged in (1)
unfair and deceptive trade practices in violation of N.C. Gen. Stat.
§ 75-1.1; (2) violation of state insurance laws, specifically N.C.
Gen. Stat. § 58-51-37; (3) intentional interference with fiduciary
relationships; (4) constructive fraud, violation of fiduciary duty,
and conversion; (5) actual fraud; (6) two violations of the
Controlled Substances Act, N.C. Gen. Stat. § 90-95 and 90-108; (7)
violation of the Pharmacy Practice Act; (8) violation of the
Racketeer Influenced and Corrupt Organizations (RICO) Act; (9)
illegal self referrals; (10) illegal exclusive arrangements for
transmission of prescriptions; and (11) unjust enrichment.
Plaintiff also filed a motion to certify the lawsuit as a class
action. The trial court granted plaintiff's motion to certify the
class. Subsequently, defendants filed motions for summary judgment
and a motion to decertify the class of plaintiffs. Plaintiff also
filed a motion for partial summary judgment.
The trial court granted partial summary judgment on the claims
of constructive fraud, breach of fiduciary duty, unfair and
deceptive trade practices, and intentional interference with
fiduciary relationship, against plaintiff on behalf of the PWLC
patients who did not ask to take their prescription to an outside
pharmacy. The trial court granted full summary judgment on theclaims of violation of state insurance laws, conversion, violation
of the RICO Act, illegal self-referral, and unjust enrichment
against the entire class of plaintiffs. The trial court granted
defendants' uncontested motion to dismiss the claims pertaining to
the Controlled Substances Act and actual fraud. The trial court
denied plaintiff's motion for partial summary judgment and
defendants' motion to decertify the class. The trial court
certified this interlocutory appeal of the summary judgment order
pursuant to Rule 54 of the Rules of Civil Procedure, stating
[t]here is no just reason to delay appeal of this Order, as an
immediate appeal will promote judicial economy. The appeal should
take place before a ruling on the claims of the remaining class
members to prevent this matter from being litigated twice. Thus,
the parties appeal the trial court's order.
The issues presented by plaintiff on appeal are whether the
trial court erred by (I) granting partial summary judgment for
defendant against all customers who did not ask to take their
prescription to an outside pharmacy; (II) granting full summary
judgment for defendant against all plaintiffs on issues pertaining
to insurance laws, the RICO Act, and illegal self-referrals; and
(III) modifying the definition of the class. Defendants'
assignments of error are discussed infra
Partial Summary Judgment
 Plaintiff first argues that the trial court erred by
granting defendants partial summary judgment with regard tocustomers who did not ask to take their prescription to an outside
pharmacy. We agree.
[T]he standard of review on appeal from summary judgment is
whether there is any genuine issue of material fact and whether the
moving party is entitled to a judgment as a matter of law.
Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 733, 504
S.E.2d 574, 577 (1998) (citing Wilmington Star News, Inc. v. New
Hanover Regional Medical Center,Inc. 125 N.C. App. 174, 178, 480
S.E.2d 53, 55, appeal dismissed, 346 N.C. 557, 488 S.E.2d 826
(1997)). See also N.C.R. Civ. P. 56(c). A summary judgment
movant bears the burden of establishing the lack of any triable
issue[.] Schmidt v. Breeden, 134 N.C. App. 248, 251, 517 S.E.2d
171, 174 (1999). A defendant who moves for summary judgment may
meet this burden by showing either that (1) an essential element of
plaintiff's claim is nonexistent; (2) plaintiff cannot produce
evidence to support an essential element of its claim; or (3)
plaintiff cannot surmount an affirmative defense raised in bar of
its claim. Lyles v. City of Charlotte, 120 N.C. App. 96, 99, 461
S.E.2d 347, 350 (1995), rev'd on other grounds, 344 N.C. 676, 477
S.E.2d 150 (1996). [T]he evidence presented by the parties must
be viewed in the light most favorable to the non-movant. Bruce-
Terminix, 130 N.C. App. at 733, 504 S.E.2d at 577. Since summary
judgment is a somewhat drastic remedy, the court must cautiously
observe its requirements so that no party is deprived of a trial
on a genuine disputed factual issue. Kessing v. Mortgage Corp.,
278 N.C. 523, 534, 180 S.E.2d 823, 830 (1971).
Breach of Fiduciary Duty
First, we review the trial court's grant of partial summary
judgment on the issue of breach of fiduciary duty. Plaintiff
contends the trial court erred in granting partial summary judgment
of this issue. We agree.
A fiduciary relationship must exist for there to be a breach
of fiduciary duty. Dalton v. Camp, 353 N.C. 647, 651, 548 S.E.2d
704, 707 (2001). A fiduciary relationship
exists in all cases where there has been a
special confidence reposed in one who in equity
and good conscience is bound to act in good
faith and with due regard to the interests of
the one reposing confidence. [I]t extends to
any possible case in which a fiduciary relation
exists in fact, and in which there is
confidence reposed on one side, and resulting
domination and influence on the other.
Tin Originals, Inc. v. Colonial Tin Works, Inc., 98 N.C. App. 663,
666, 391 S.E.2d 831,833 (1990) (quoting Abbitt v. Gregory, 201 N.C.
577, 598, 160 S.E. 896, 906 (1931)). [T]his Court has recognized
that the relationship of patient and physician is considered to be
a fiduciary one, 'imposing upon the physician the duty of good faith
and fair dealing.' Watts v. Cumberland County Hosp. System, Inc.,
317 N.C. 110, 116, 548 S.E.2d 879, 884 (1986) (quoting Black v.
Littlejohn, 312 N.C. 626, 646, 325 S.E. 2d 469, 482 (1985)).
In the instant case, the parties stipulated a
physician/patient relationship existed between the class members and
the doctor at each PWLC franchise office who examined them and
prescribed weight loss drugs for them. The trial court found,however, [d]efendants did not owe a fiduciary duty to those
plaintiffs [who did not request the prescription] because no
resulting superiority occurred if a plaintiff did not request a
prescription. We disagree. Plaintiff and those on whose behalf
she is proceeding provided medical background and submitted to
medical testing by PWLC employees and the doctors providing medical
services under contract with defendants. The fiduciary relationship
existed whether the customer requested a prescription or not. We
conclude the relationship was a fiduciary relationship. A fiduciary
has a duty to disclose all facts material to a transaction. Stamm
v. Salomon, 144 N.C. App. 672, 680-81, 551 S.E.2d 152, 158 (2001).
The evidence, viewed in the light most favorable to the nonmovant,
tends to show physicians under contract with defendants failed to
disclose to the patients that the patients had a right to their
prescriptions. Therefore, we conclude the trial court erred in
granting partial summary judgment on the issue of breach of
Intentional Interference With A Fiduciary Relationship
 Next, we review the decision of the trial court to grant
partial summary judgment for defendants on the issue of intentional
interference with a fiduciary relationship. Plaintiff specifically
argues that PWLC interfered with the relationship between physicians
employed by PWLC and their patients by not allowing the physicians
to give patients a copy of their prescription to take to an outside
pharmacy. Plaintiff contends the trial court erred in granting partial summary judgment on this issue. We affirm in part and
reverse in part.
North Carolina does not recognize a cause of action for the
tort of intentional interference with a fiduciary relationship.
Burgess v. Busby
, 142 N.C. App. 393, 405, 554 S.E.2d 4, 10 (2001).
Plaintiff cites to Cameron v. New Hanover Memorial Hospital, Inc.
58 N.C. App. 414, 293 S.E.2d 901 (1982) in asserting her claim
against PWLC for tortious interference with a fiduciary
relationship. In Cameron
, the plaintiffs were podiatrists who filed
an action against a hospital for denying plaintiffs hospital staff
privileges. Among the claims alleged in the complaint was wrongful
interference with the business
relationship between plaintiffs and
their patients. 58 N.C. App. at 439-40, 293 S.E.2d at 916-17.
Plaintiff's reliance on Cameron
is misplaced because the issue
plaintiff raises before this Court is intentional interference with
relationship between PWLC physicians and their
Plaintiff has not cited any case law that establishes a
cause of action for interference with a fiduciary physician-patient
relationship. Thus, we affirm the trial court's dismissal of the
claim for intentional interference with a fiduciary relationship as
to those plaintiffs who did not request their prescription.
reverse the trial court's denial of summary judgment as to the
plaintiffs who requested their prescriptions.
 Plaintiff argues the trial court erred in granting partial
summary judgment on the issue of constructive fraud. We agree. To sustain a cause of action for constructive fraud, plaintiff
must allege facts and circumstances (1) which created a relationship
of trust and confidence, and (2) which led up to and surrounded a
transaction in which defendant allegedly took advantage of his
position of trust to injure the plaintiff. Watts
, 317 N.C. at 116,
343 S.E.2d at 880 (1986). When a fiduciary relation exists between
parties to a transaction, equity raises a presumption of fraud when
the superior party obtains a possible benefit. Id.
(citing 37 Am.
Jur. 2d Fraud and Deceit
§ 442, at 602 (1968). Our court has held
that whether plaintiff's damages were the proximate result of
defendant's actions is almost always a question of fact for the
jury. Barber v. Woodmen of the World Life Ins. Society
, 95 N.C. App
340, 345, 382 S.E.2d 830, 834 (1989) (citing Winston Realty Co. v.
, 70 N.C. App. 374, 320 S.E.2d 286 (1984), affirmed
N.C. 90, 331 S.E.2d 677 (1985)).
In the instant case, the trial court concluded:
The elements of constructive fraud require the
Court to again turn to the issue of injury to
plaintiff caused by PWLC. . . . A plaintiff did
not incur an actual injury unless the patient
requested, and a PWLC physician refused to
provide, a prescription. A patient that
entered into a contract to receive medicine at
a higher price, not availing himself of cost
savings of an outside pharmacy, assented to the
terms offered by PWLC. The patient had the
right to procure the medicine and the physician
services at any cost that he chose so long as
a disparity in bargaining power did not coerce
(citations omitted). The trial court's reasoning assumes those who
did not request their prescription knew of their entitlement to
their prescriptions -- a fact defendants failed to disclose -- andwaived their right to their prescriptions. There is no evidence to
support that assumption. The evidence of record indicates the
physicians failed to disclose the fact that the patients had a right
to their prescriptions. If the clients did not know they were
entitled to their prescriptions under the law and would have sought
to take their prescriptions to another pharmacy had they known of
their entitlement, they suffered actual injury. Clients who did not
know of their entitlement to their prescription but who would have
used the pharmacy services provided through defendants anyway did
not suffer injury. These are facts to be determined by the jury.
Therefore, we reverse the trial court's grant of partial summary
judgment on the claim of constructive fraud.
Unfair and Deceptive Trade Practice
Next, we consider whether the trial court erred in granting
partial summary judgment against those clients who did not request
their prescriptions as to the claim under the Unfair and Deceptive
Trade Practice Act (UDTPA).
To prevail on a claim of unfair and deceptive trade practice
a plaintiff must show (1) an unfair or deceptive act or practice,
or an unfair method of competition, (2) in or affecting commerce,
(3) which proximately caused actual injury to the plaintiff[.]
Spartan Leasing v. Pollard, 101 N.C. App. 450, 460, 400 S.E.2d 476
482 (1991) (citing N.C. Gen. Stat. § 75-1.1 and 75-16). Actual
injury includes the loss of the use of specific and unique
property, the loss of any appreciated value of the property, and
such other elements of damages as may be shown by the evidence. Belcher v. Fleetwood Enterprises, 162 N.C. App. 80, 85, 590 S.E.2d
15, 18-19 (2004) (citing Poor v. Hill, 138 N.C. App. 19, 34, 530
S.E.2d 838, 848 (2000)).
In the instant case, the trial court found:
The withholding of prescriptions by PWLC
amounted to unethical conduct and contravened
public policy, thus overriding the freedom of
contract argument. . . . The PWLC policy was
that physicians were not to give patients
prescriptions to fill at outside pharmacies.
The problem with the customer contract and the
policy of withholding prescriptions taken
together is that such practices mandated a
physician practice_the refusal to provide a
prescription_that violated medical ethics. The
withholding of prescriptions, therefore, is
unethical conduct and satisfies the fairness
prong, as PWLC encouraged physicians to treat
their patients in a manner that amounted to an
The trial court also found the claim was sufficient to satisfy the
second essential element of an unfair and deceptive practice claim.
The trial court stated:
The claim against PWLC also meets the second
prong requiring an unfair or deceptive act that
affects commerce. Courts broadly interpret
commerce under the UDTPA as a business activity
of any kind limited only by express exemptions
within the statute. Bhatti v. Buckland, 328
N.C. 240, 245-46, 400 S.E.2d 440, 443-44
(1991). The exchange of money for services to
facilitate weight loss constitutes a business
activity. No exemption applies, as none of
defendants are physicians and are not protected
by the learned profession exemption under the
The trial court, however, concluded those clients who did not
request their prescriptions were not injured and therefore,
plaintiff failed to meet the third essential element of a claim forunfair and deceptive trade practices. Plaintiff contends the trial
court erred in its analysis related to damages. We agree.
At a minimum, a jury question exists as to damages. Our
analysis of the issue of damages with regard to plaintiff's claim
for constructive fraud, supra, is also applicable to the issue of
damages related to plaintiff's claim under the Unfair and Deceptive
Trade Practices Act. For the reasons stated therein, we reverse the
order granting partial summary judgment as to the plaintiffs who did
not request their prescriptions.
Full Summary Judgment
Plaintiff next argues that the trial court erred by granting
defendants full summary judgment on plaintiff's claims based on the
pharmacy of choice statute, the RICO Act, and illegal self-
N.C. Gen. Stat. § 58-51-37
 Plaintiff assigns error to the trial court's grant of
summary judgment for defendants on plaintiff's claim that defendants
violated N.C. Gen. Stat. § 58-51-37. We disagree.
Chapter 58 of the General Statutes governs the insurance
industry. Article 51 of chapter 58 specifically governs the
provisions of health, accident, and death insurance policies or
contracts in this State. N.C. Gen. Stat. § 58-51-37(a) (2003)
This section shall apply to all health benefit
plans providing pharmaceutical services
benefits, including prescription drugs, to any
resident of North Carolina. . . . This section
shall not apply to any entity that has its own
facility, employs or contracts with physicians,pharmacists, nurses, and other health care
personnel, and that dispenses prescription
drugs from its own pharmacy to its employees
and to enrollees of its health benefit plan;
provided, however, this section shall apply to
an entity otherwise excluded that contracts
with an outside pharmacy or group of pharmacies
to provide prescription drugs and services.
A health benefit plan is defined in N.C. Gen. Stat. § 58-50-
110(11) as any accident and health insurance policy or certificate;
nonprofit hospital or medical service corporation contract; health,
hospital, or medical service corporation plan contract; HMO
subscriber contract; plan provided by a MEWA or plan provided by
another benefit arrangement, to the extent permitted by ERISA,
subject to G.S. 58-50-115.
N.C. Gen. Stat. § 58-51-37(c)(4) provides that:
The terms of a health benefit shall not: . . .
impose a monetary advantage or penalty under
a health benefit plan that would affect a
beneficiary's choice of pharmacy. Monetary
advantage or penalty includes higher copayment,
a reduction in reimbursement for services, or
promotion of one participating pharmacy over
another by these methods.
In the instant case, plaintiff contends defendants' contract
with class members to provide medical services was a health benefit
plan governed by N.C. Gen. Stat. § 58-51-37. We disagree.
N.C. Gen. Stat. § 58-51-37, the pharmacy of choice statute,
governs accident and health insurance policies and similar
contracts. The statute does not apply to contracts for medical and
other services such as the contracts between defendants and their
clients. Thus, we affirm the trial court's grant of summaryjudgment for defendants on plaintiff's claim for a violation of N.C.
Gen. Stat. § 58-51-37.
 Plaintiff also argues that the trial court erred in holding
there is no private cause of action under N.C. Gen. Stat. § 90-406.
N.C. Gen. Stat. § 90-406 prohibits health care providers
from referring patients to entities in which the health care
provider is an investor. The statute further provides:
(b) No invoice or claim for payment shall be
presented by any entity or health care
provider to any individual, third-party
payer, or other entity for designated
health care services furnished pursuant to
a referral prohibited under this Article.
(c) If any entity collects any amount pursuant
to an invoice or claim presented in
violation of this section, the entity
shall refund such amount to the payor or
individual, whichever is applicable,
within 10 working days of receipt.
N.C. Gen. Stat. § 90-406 (2003).
"Health care provider" is any person who,
pursuant to Chapter 90 of the General Statutes,
is licensed, or is otherwise registered or
certified to engage in the practice of any of
the following: medicine, dentistry, optometry,
osteopathy, chiropractic, nursing, podiatry,
psychology, physical therapy, occupational
therapy or speech and language pathology and
N.C. Gen. Stat. § 90-405(7). The penalties for violation of the
statute are outlined in N.C. Gen. Stat. § 90-407. The statute
provides for disciplinary action by the applicable board that
licenses, registers or certifies the professional practice of thehealth care provider. The statute also provides for civil penalties
(b) Any health care provider who refers a
patient in violation of G.S. 90-406(a), or any
health care provider or entity who
(1) Presents or causes to be
presented a bill or claim for service
that the health care provider or
entity knows or should know is
prohibited by G.S. 90-406(b), or
(2) Fails to make a refund as
required by G.S. 90-406(c),
shall be subject to a civil penalty of not more
than twenty thousand dollars ($20,000) for each
such bill or claim, to be recovered in an
action instituted either in Wake County
Superior Court, or any other county, by the
Attorney General for the use of the State of
N.C. Gen. Stat. § 90-407 (2003).
We note initially that plaintiff concedes defendants are not
licensed within the meaning of § 90-405(7)[.] Plaintiff argues
defendants hold themselves out to the public as health care
providers and . . . deliver health care services to their
patients. . . . Accordingly, the defendants were acting as health
care providers under § 90-405(7). The statute governs health care
providers as defined within the statute. Because plaintiff
concedes the defendants are not health care providers as defined in
the statute, summary judgment was appropriate. In addition,our
case law generally holds that a statute allows for a private cause
of action only where the legislature has expressly provided a
private cause of action within the statute. Vanasek v. Duke Power
Co., 132 N.C. App. 335, 339 n.2, 511 S.E.2d 41, 44 n.2 (1999). Thelegislature did not provide for a private right of action with
regard to violations of § 90-406. Instead, the legislature provided
for disciplinary action by the applicable licensing board and civil
penalties in actions initiated by the Attorney General. We hold
there is no private right of action for violations of § 90-406.
Therefore, we affirm the order granting summary judgment on
plaintiff's claim for violations of N.C. Gen. Stat. § 90-406.
Racketeer Influenced and Corrupt Organizations Act
 Plaintiff next argues that the trial court erred by
concluding that plaintiff failed to establish a claim under the
Racketeer Influenced and Corrupt Organizations (RICO) Act, N.C.
Gen. Stat. § 75D-1, et seq. We disagree.
RICO generally prohibits any pattern of racketeering
activity. N.C. Gen. Stat. § 75D-4(a)(1) (2003). Racketeering
activity is defined in pertinent part as follows:
(1) Racketeering activity means to commit,
to attempt to commit, or to solicit,
coerce, or intimidate another person to
commit an act or acts which would be
chargeable by indictment if such act or
acts were accompanied by the necessary
mens rea or criminal intent under the
following laws of this State:
a. Article 5 of Chapter 90 of the
General Statutes of North Carolina
relating to controlled substances and
counterfeit controlled substances;
. . . .
(2) Racketeering activity also includes the
description in Title 18, United States
Code, Section 1961(1).
N.C. Gen. Stat. § 75D-3(c) (2003).
Plaintiff argues that the summary judgment evidence establishes that
defendants, that [sic] throughout the class
period, engaged in and/or participated in an
enterprise that engaged in multiple acts of
racketeering activity including:
(1) sales of controlled substances, proscribed
by G.S. § 90-95(a)(1);
(2) mail fraud, in violation of 18 U.S.C. §
1341, using the U.S. mail illegally to
distribute controlled substances to
(3) wire fraud, in violation of 18 U.S.C. §
1343, in using fax machines and electronic
credit card transmissions to accomplish
their illegal purposes.
In support of the allegations of a violation of the RICO statute,
plaintiff tendered evidence of the following facts: The PWLC
customers who contracted for weight loss services that included
prescription drugs paid the local franchise for the drugs. The
prescriptions were faxed to Colonial Pharmacy in Ohio for
processing. Colonial Pharmacy filled the prescriptions and mailed
the drugs to the patient's residence. The local franchise paid the
corporate office for the costs of the drug. The corporate office
paid Colonial Pharmacy for filling the prescriptions and mailing the
drugs to patients in North Carolina. The local franchise received
the difference between what the customer paid for the prescription
and the cost to the corporate office. Plaintiff's tender of
evidence on defendants' violation of N.C. Gen. Stat. § 90-95(a)(1)
is not sufficient to support the claim. The evidence viewed in the
light most favorable to plaintiff supports the conclusion the local
franchisees were paid by customers for the service of forwarding
prescriptions to Colonial Pharmacy to be processed. The facts donot support the conclusion defendants violated N.C. Gen. Stat. § 90-
95(a)(1) by engaging in the sale of a controlled substance.
Additionally, we note the trial court dismissed plaintiff's claim
under N.C. Gen. Stat. § 90-95(a)(1) without objection by plaintiff.
Thus, plaintiff's argument that defendants engaged in the sales of
controlled substances, mail fraud by using the United States mail
illegally to distribute controlled substances, and wire fraud in
using fax machines and electronic credit card transmissions to
accomplish their purposes fails. Because plaintiff's controlled
substances argument fails, plaintiff has failed to allege conduct
sufficient to support a finding that these . . . [d]efendants were
'engaged in a pattern of racketeering activity.' Delk v.
., 179 F. Supp. 2d 615, 627-28 (W.D. N.C. 2002).
For these reasons, we conclude that the trial court did not err by
granting summary judgment for defendants on this issue.
Decertifying the class based on lack of numerosity
 Next, plaintiff argues that the trial court erred by
decertifying the class of plaintiffs based on the lack of
numerosity. We agree.
It is well settled that ordinarily one judge may not modify,
overrule, or change the judgment of another Superior Court judge
previously made in the same action." Calloway v. Motor Co.
N.C. 496, 189 S.E.2d 484 (1972). However, in an appropriate
context a superior court judge has the power to modify an
interlocutory order entered by another . . . . Dublin v. UCR,
., 115 N.C. App. 209, 219, 444 S.E.2d 455, 461 (1994). Therefore, interlocutory orders may be modified due to changed
In the instant case, Judge Morgan entered an order in which he
made the following findings:
3. There are common issues of law which include
whether any of the defendants' drug practices
constitute an impermissible interference with
an individual's right to buy prescription drugs
at a lower available price and/or otherwise
constitute violations of law as alleged in the
Complaint. The Court makes no ruling on the
validity and sufficiency of plaintiff's claims
and has not ruled on defendants' dispositive
motions, which were pending at the time of the
hearing on plaintiff's motion for class
4. Common issues of fact and law predominate
over individual issues asserted by defendants,
such as the nature of any alleged oral
fraudulent or other misrepresentations made by
a defendant concerning drug prices and the
means by which Kelly Suggs or prospective class
members could obtain their prescription drugs,
whether and to what extent Kelly Suggs or
prospective class members relied upon any
alleged fraudulent or other misrepresentation,
or the extent to which, if any, Kelly Suggs or
prospective class members may have been
5. The plaintiff will fairly and adequately
represent the Class.
6. The members of the Class are so numerous
that it would be impractical to join them all
and thus, the numerosity requirement has been
7. The Class action is superior to any other
available method of resolving this dispute.
Based on the findings, Judge Morgan entered an order certifying a
class defined as all persons who purchased prescription drugs fromthe defendants in North Carolina from June 20, 1995 to the date of
The order entered by Judge [Morgan] was interlocutory. . . .
Thus, a subsequent judge could modify the order for circumstances
which changed the legal foundation for the prior order. Dublin,
N.C. App. at 220, 444 S.E.2d at 461. The changed circumstance relied
upon by Judge Tennille was the modification of the class based on
a new definition of the class as a result of his summary judgment
The trial court concluded
[t]he summary judgment order alters the class
by limiting it to those plaintiffs who did
request prescriptions for use at other
pharmacies. Plaintiffs that did not request
prescriptions for use elsewhere and to whom
PWLC did not refuse such requests do not have
claims as a matter of law. . . . Thus, the
class definition has been modified to consist
of a class of plaintiffs who were denied their
written prescriptions when requested. The
modification results from the summary judgment
The trial court then ordered: The class definition is modified to
consist only of plaintiffs who were denied their written
prescriptions when requested[.] After redefining the class, the
trial court issued an order decertifying the class because [t]he
Order granting summary judgment leaves only the class representative
with a claim pending against defendants. The existence of only one
plaintiff clearly does not create an impractical situation under
Because we have reversed several of the trial court's summary
judgment rulings as to those plaintiffs who did not request theirprescriptions, the class remains as previously defined. Therefore,
we reverse the trial court order decertifying the class.
Defendant's Cross Appeal
 Defendants have filed a cross-appeal asking this Court to
affirm the trial court's order decertifying the class asserting
alternative bases for the trial court's action. Specifically,
defendants argue the trial court's order decertifying the class can
be supported in law by the following bases: (I) plaintiff is not
a suitable representative of the class; (II) individual issues of
law or fact predominate over common issues of law or fact among the
plaintiffs; and (III) a class action is not the superior method for
adjudicating this controversy.
Defendants raise these arguments for the first time on appeal.
On 17 April 2003, defendants filed a motion to decertify the class
and in the motion, stated the following: Defendants request such
decertification based on the change in legal circumstances that has
occurred since the class certification order was originally
entered. The trial court denied defendants' motion in the same
order granting summary judgment to defendant and decertifying the
class entered 3 March 2004. There is nothing in the record to
indicate defendant presented the alternative grounds for
decertifying the class to the trial court. It is axiomatic with
us that a litigant must be heard here on the theory of the trial
below and he will not be permitted to switch horses on his appeal.
Nor may he ride two horses going different routes to the same
destination. Graham v. Wall
, 220 N.C. 84, 94, 16 S.E.2d 691, 697(1941). Therefore, defendants' assignments of error are overruled.
Affirmed in part and reversed in part.
Judges Hudson and Steelman concur.
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