N.C. B. & Tavern Ass'n v. Cooper

901 S.E.2d 355

NORTH CAROLINA BAR AND TAVERN ASSOCIATION; et al., Plaintiffs,

v.Roy A. COOPER, III, in his official capacity as Governor of North Carolina, Defendant.

No. COA22-725

Court of Appeals of North Carolina.

Filed April 16, 2024

Appeal by Plaintiffs from an order entered 29 March 2022 by Judge James L. Gale in the Wake County Superior Court. Heard in the Court of Appeals 9 May 2023. Wake County, No. 20 CVS 6358

Stevens Martin Vaughn & Tadych, PLLC, by Michael J. Tadych and K. Matthew Vaughn; and Robert F. Orr, Asheville, for Plaintiffs.

Attorney General Joshua H. Stein, by Senior Deputy Attorney Generals Amar Majmundar and Matthew Tulchin, for Defendant.

WOOD, Judge.

Plaintiffs appeal from the trial court’s order granting summary judgment for Defendant and dismissing all their claims arising out of Defendant’s Executive Order No. 141 issued in response to the COVID-19 pandemic. On 17 March 2020, Defendant issued Executive Order No. 118 closing all bars including those in restaurants. On 20 May 2020, Defendant issued Executive Order No. 141 letting some types of bars reopen with specific safety precautions but requiring private bars, including those owned by Plaintiffs, to remain closed. Defendant relied on "science and data" he claimed created a reasonable basis to distinguish between types of bars, thus letting some reopen while keeping others closed. We have considered the information Defendant provided to the trial court to justify this distinction in the light most favorable to Defendant. Defendant’s "science and data" tends to show that bars in general did present a heightened risk of COVID-19 transmission, as people normally gather, drink, and talk in bars of all sorts. We have considered the "science and data" presented by Defendant to justify the distinction between closing some types of bars and not others, but this information does not support Defendant’s position, even if we consider all such information to be true. Some of the information did not exist at the time of Executive Order No. 141, so Defendant could not have relied on it. Most of the information is news articles, at best anecdotal reports of various incidents in different places around the world. None of the information addresses any differences in risk of COVID-19 transmission between Plaintiffs’ bars and the other types of bars allowed to reopen. For the reasons explained below, we have determined the trial court erred when it denied Plaintiffs’ summary judgment motion and dismissed Plaintiffs’ claims under N.C. Const. art. I, § 1, the "fruits of labor clause," and for denial of equal protection under N.C. Const. art. I, § 19. The trial court properly dismissed Plaintiffs’ other claims, and we have also determined the trial court lacked jurisdiction to award attorneys’ fees on Plaintiffs’ Public Records Act claim. We therefore affirm in part, reverse in part, and remand to the trial court for further proceedings.

I. Background

On 10 March 2020, in response to the COVID-19 pandemic, Governor Roy Cooper ("Defendant") declared a state of emergency in North Carolina as authorized by the Emergency Management Act ("EMA"). Defendant subsequently issued executive orders for the stated purpose of mitigating the damage caused by the pandemic. Several of these orders affected certain owners and operators of bars ("Plaintiffs"), including the 17 March 2020 order which mandated the closure of all bars selling "alcoholic beverages for onsite consumption" (Executive Order No. 118).

On 20 May 2020, Defendant signed an executive order titled, "EASING RESTRICTION ON TRAVEL, BUSINESS OPERATIONS, AND MASS GATHERINGS: PHASE 2" (Executive Order No. 141). This order allowed restaurants to open for on-premises service under certain conditions. Section Eight of the order specifically kept bars closed: "This Executive Order solely directs that bars are not to serve alcoholic beverages for onsite consumption[.]" The order defined "bars" as "establishments that are not eating establishments or restaurants as defined in N.C. Gen. Stat. §§ 18B-1000(2) and 18B-1000(6) that have a permit to sell alcoholic beverages for onsite consumption … and that are principally engaged in the business of selling alcoholic beverages for onsite consumption."

In Section Five of the order, Defendant stated his reasoning in support of keeping bars closed:

[B]y their very nature, [bars] present greater risks of the spread of COVID-19. These greater risks are due to factors such as people traditionally interacting in that space in a way that would spread COVID-19 … or a business model that involves customers or attendees remaining in a confined indoor space over a sustained period.

The order specifically allowed "retail beverage venues" to sell "beer, wine, and liquor for off-site consumption only." The order also specifically exempted "production operations at breweries, wineries, and distilleries" from closures.

North Carolina Bar and Tavern Association submitted a public records request to Defendant on 29 May 2020, requesting the disclosure of records related to a statement made by Defendant in a 28 May 2020 press conference that he made the decision to keep bars closed based on "data and science" and "daily briefings from doctors and healthcare experts." Defendant eventually provided the records on 18 September 2020, following the commencement of this action.

Plaintiffs filed suit against Defendant on 4 June 2020 seeking, among other things, a temporary restraining order and/or preliminary injunction preventing Defendant from enforcing Executive Order No. 141. Chief Justice Cheri Beasley of the North Carolina Supreme Court designated the matter as a Rule 2.1 Exceptional Case on 9 June 2020. Plaintiffs filed an amended complaint on 11 June 2020 and subsequently filed a renewed motion for a temporary restraining order and/or preliminary injunction on 15 June 2020. The trial court denied the motion on 26 June 2020.

Defendant filed a motion to dismiss the complaint on 8 July 2020. On 26 October 2021, Plaintiffs filed a Second Amended Complaint bringing forth six causes of action seeking: (1) declaratory relief regarding Plaintiffs’ right to earn a living under N.C. Const. art. I, § 1; (2) declaratory relief regarding Plaintiffs’ right to equal protection pursuant to N.C. Const. art. I, § 19 and N.C. Gen. Stat. § 166A-19.74; (3) declaratory relief for Defendant’s alleged taking of Plaintiffs’ property in violation of N.C. Const. art. I, § 19; (4) declaratory relief regarding Defendant’s alleged violation of the monopolies clause of N.C. Const. art. I, § 34; (5) compensation under N.C. Gen. Stat. § 166A-19.73 for Defendant’s alleged taking or use of Plaintiffs’ property under that statute; and (6) a fee award under N.C. Gen. Stat. § 132-9(c) for Defendant’s alleged violation of the Public Records Act.

On 9 November 2021, Defendant filed a motion to dismiss all claims of the Second Amended Complaint. On 23 November 2021, Plaintiffs filed a motion for partial summary judgment as to their first, third, fifth, and sixth causes of action. The trial court denied Plaintiffs’ motion for partial summary judgment and granted Defendant’s motion to dismiss, thereby dismissing Plaintiffs’ Second Amended Complaint on 29 March 2022.

On 27 April 2022, Plaintiffs filed a written notice of appeal pursuant to N.C. Gen. Stat. § 7A-27(b). All other relevant facts are provided as necessary in our analysis.

II. Procedural Posture and Standard of Review

As an initial matter, we must provide clarification on the procedural posture of this case and reasoning for how we address the trial court’s order, which operates as a combined order on Defendant’s motion to dismiss all six claims as well as Plaintiffs’ motion for partial summary judgment on four out of six claims. Plaintiffs’ cause of action pertaining to equal protection is the sole issue upon which Plaintiffs did not move for summary-judgment or abandon on appeal. It is not immediately apparent which causes of action the trial court addressed under the standard for a motion to dismiss versus a motion for summary judgment.

For example, although Plaintiffs filed a motion for summary judgment as to their cause of action for compensation pursuant to N.C. Gen. Stat. § 166A-19.73, the trial court dispensed with the cause of action by stating it "should be DISMISSED." The same is true for Plaintiffs’ constitutional claims. However, on the final page of the order, the trial court specifically stated, "Plaintiffs’ Motion for Partial Summary Judgment should be DENIED, Defendant’s Motion to Dismiss should be GRANTED, and Plaintiffs’ Second Amended Complaint is HEREBY DISMISSED WITH PREJUDICE."

The parties appear to presume the trial court addressed Plaintiffs’ causes of action according to whether Plaintiffs moved for summary judgment on a particular cause of action. For example, both Plaintiffs and Defendant present the relevant standards of review for both a motion to dismiss and a motion for summary judgment in their respective briefs, therefore presuming that the trial court addressed each cause of action under the appropriate standard. See Plaintiffs’ Opening Brief, pp. 6–7; Defendant’s Brief, pp. 10–11.

However, we must determine whether the trial court’s ruling on Plaintiffs’ equal protection claim, upon which they did not move for summary judgment,¹ was converted to a summary judgment ruling because of the trial court’s consideration of material beyond the pleadings. The trial court did not directly address Plaintiffs’ equal protection claim. Rather, it appeared to address all their constitutional claims together. After determining that Plaintiffs were not entitled to compensation pursuant to the EMA, the trial court stated, "Plaintiffs’ right to compensation, if any, must then rest on a constitutional claim."

This Court has stated regarding the conversion of a Rule 12(b)(6) motion to dismiss to a Rule 56 motion for summary judgment:

[T]he only purpose

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