Court reverses ruling in fair suit

The Associated PressJuly 4, 2007 

— The state Court of Appeals on Tuesday reversed a trial-court ruling related to a State Fair contract and campaign finance scandal that led to prison time for the state's former agriculture commissioner.

Florida-based Strates Shows, the plaintiff, managed the North Carolina State Fair midway for more than 50 years. The company lost the deal in 2002 when then-Agriculture Commissioner Meg Scott Phipps awarded the contract to New Jersey-based Amusements of America. Federal prosecutors portrayed Phipps, the daughter and granddaughter of former governors, as the ringleader in a scheme to accept illegal contributions from carnival companies seeking to do business at state-operated fairs. The money went to pay off campaign debt and for personal use, the government said.

Phipps pleaded guilty to extortion, conspiracy and mail fraud and was sentenced to four years in federal prison. She was released earlier this year.

Strates sued in federal court in Raleigh, alleging fraud, conspiracy or unfair trade practices by more 30 defendants. Strates argued it would have received the 2002 midway contract had it not been for the Phipps scheme and the defendants' "unlawful conduct."

U.S. District Court Judge Louise Flanagan ruled against Strates, saying the company had no pre-existing contract with the state to run the midway at the fair that had been terminated by the illegal activities.

In November 2005, Strates filed a similar lawsuit in state court.

Defendants then filed motions asking the court to dismiss the case based on the previous ruling in federal court.

The state Appeals Court ruled Tuesday that the lower court erred by denying the motions to dismiss. The ruling said the federal court ruling had stopped Strates "from asserting claims based upon issues which were finally decided in a prior judicial proceeding between the same parties."

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