Top NC court allows bar owners to pursue COVID shutdown cases against governor

The North Carolina Supreme Court issued a pair of decisions Friday allowing bar owners in the state to pursue lawsuits against the governor over COVID-related shutdowns in 2020. The court’s majority emphasized the bar owners’ state constitutional rights to the “fruits of their own labor.”

Justices split 5-2 in both cases, with the Republican majority splitting from Democratic dissenters.

“Today’s rulings are a clear win for North Carolinians’ right to work: the Court gave real teeth to the North Carolina Constitution’s ‘fruits of their own labor’ clause, making plain that when government restricts ordinary businesses it must have a good reason and use steps that were reasonably necessary based on what was known at the time,” said Donald Bryson, CEO of the John Locke Foundation and publisher of Carolina Journal. “The Court also made clear that when there’s no other fair way to get relief, people can still ask a court to hold the state accountable and have the facts heard. Together, these decisions keep emergency powers within constitutional guardrails while ensuring hardworking North Carolinians can have their day in court.”

Chief Justice Paul Newby wrote for the majority in Howell v. Cooper. The Howell plaintiffs challenged then-Gov. Roy Cooper’s decision to keep bars closed as other businesses reopened during the 2020 pandemic.

“The complaint in this case alleges that defendants impermissibly abridged plaintiffs’ fundamental rights to earn a living when, in response to the novel coronavirus disease (COVID-19), the Governor issued executive orders that either overtly ordered plaintiffs to close their bars or so severely restricted their operations that plaintiffs found it no longer practicable to remain open,” Newby wrote. “Defendants insist that plaintiffs’ claims are barred under the doctrine of sovereign immunity and must be dismissed.”

“Under our caselaw, however, plaintiffs may bring a direct claim against the State under the state constitution if they colorably allege that a state actor violated their state constitutional rights, thereby causing injury for which there is no other adequate, alternative state remedy,” Newby added. “Sovereign immunity does not bar these so-called ‘Corum claims.’”

Corum refers to a 1992 case in which the state Supreme Court allowed plaintiffs to pursue lawsuits against the state for constitutional violations when they have no other possible remedy.

“[W]e conclude that plaintiffs’ claims are colorable because the complaint pleads facts that, under current law, are sufficient to support the alleged violations of their rights to earn a living,” Newby added.

“[I]mportantly, if proved, the facts alleged in the complaint could entitle plaintiffs to relief under the Fruits of Their Own Labor Clause and Law of the Land Clause,” the ehief justice explained. “Indeed, taken as true, the factual allegations indicate that at least some of the executive orders, when viewed individually and/or cumulatively, burdened plaintiffs heavily.”

The Supreme Court ordered the Howell case sent back to a trial judge.

“We recognize that the Governor and his staff were operating in an emergency scenario and that each executive order represents a decision at a particular point in time,” Newby wrote. “Accordingly, when evaluating these emergency executive orders, … the analysis must take into consideration the information available at each point in time. Measures that may have been effective at an earlier time may not have been effective when imposed later.”

“To prevail, plaintiffs must show that the executive orders’ restrictions on bars were not reasonably necessary,” the chief justice explained. “These determinations will ultimately be matters of degree for the court to decide in light of the established facts. We do not deign to predict exactly what the evidence will be or what it will show, so we take no position on these ultimate questions.”

“We acknowledge that the COVID-19 pandemic was a chaotic period of time,” Newby wrote. “It is important to remember, however, that the Governor was not the only person facing uncertainty. Small business owners across the state dutifully shuttered their doors and scaled back operations without knowing exactly when they could open or operate fully again. They, too, did not know what the future held and were without the benefit of hindsight. Many were compelled to lay off employees, deplete cash reserves, take out unwanted loans, or close for good.”

“By virtue of the enshrinement of the fundamental right to the fruits of one’s own labor, the basic promise of the state constitution is that government regulations of this right are open to scrutiny,” the chief justice explained. “It may be that the executive orders’ restrictions on bars were reasonably necessary, but the state constitution gives plaintiffs the opportunity to put them to the test.”

Justice Anita Earls wrote for the two dissenting Democrats.

“The Court today reshapes the Fruits of Their Own Labor Clause — and with it, the constitutional balance of power,” Earls wrote. “The majority abuses notice pleading principles to invite meritless litigation. Once those cases arrive, the majority grants itself a roving license to second-guess policy choices, reweigh trade-offs, and displace decisions appropriately made by the political branches. Its new doctrine has no basis in this Court’s unanimous opinion from one year ago, Kinsley v. Ace Speedway Racing, Ltd., … nor in our constitutional scheme.”

“If this logic holds, it risks unsettling the separation of powers and turning a constitutional safeguard into a judicial veto,” Earls added.

The Fruits of Their Own Labor Clause “drifts ever closer” to becoming a judicial “weapon,” “as this Court installs the judicial branch as superintendent of laws and regulations that have economic effects,” the dissent continued. “The state Constitution does not endorse such a judicial power grab nor should a court that styles itself as constitutionally conservative.”

Justices also split, 5-2, Friday in a separate suit pitting the North Carolina Bar and Tavern Association against the governor.

“According to the trial court, Cooper’s executive orders restricted full operation of plaintiffs’ establishments for over 400 days while permitting other businesses to reopen,” Justice Phil Berger Jr. wrote for the majority. “Plaintiffs argue that the closure and differing treatment violated constitutional and statutory guarantees. Governor Cooper contends that the measures were based on science and data and were necessary responses to an ongoing emergency.

“But even in a declared emergency, the powers of those who act on behalf of the people have limits, and the citizens of this state rejected ‘because I said so’ governance long ago,” Berger added. “However well-intentioned government actors may be, they are constrained by the enduring commands of the Constitution; and constitutional guarantees cannot be suspended in this state by executive fiat.”

Berger cited the 2024 Kinsley v. Ace Speedway case, in which “we unanimously established a workable Fruits of Labor test.”

As with Howell, the NC Bar and Tavern case will return to a trial judge. That judge will address the “fruits of labor” claims. The Supreme Court rejected other pieces of the case dealing with equal protection claims and alleged violations of the Emergency Management Act and Public Records Act.

Justice Allison Riggs wrote for the two dissenting Democrats.

“The Corum claim of the North Carolina Bar and Tavern Association (the Association) under the Fruits of Their Own Labor Clause should be barred on the basis of sovereign immunity because the members of the Association have an adequate alternate remedy under the law, a claim for compensation under the North Carolina Emergency Management Act,” Riggs wrote. “Thus, I would conclude that the trial court properly entered judgment in favor of the Governor on his motion to dismiss the Fruits of Their Own Labor claim.

“[T]he Association has not met its burden of forecasting evidence that (1) there was not a ‘proper government purpose for the [state action]’; or (2) the ‘means chosen to effect that purpose’ were not ‘reasonable.’ Although the Association claimed otherwise in its complaint, it put on no competent evidence in seeking summary judgment that the Governor’s stated purpose for entering Executive Order 141 — slowing the spread of COVID-19 to save lives — was an improper purpose or that the Governor’s actual purpose was something different.”

The Supreme Court head oral arguments in both cases in October 2024.

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