Appeals Court delivers partial victory to bar owners who sued over COVID shutdown

Bar owners who sued Gov. Roy Cooper for shutting them down during the COVID-19 pandemic have won a partial victory at the state Court of Appeals. A unanimous appellate panel agreed the governor had violated bar owners’ rights to the fruits of their labor and equal protection of the laws.

At the same time, the Appeals Court rejected the bar owners’ argument that the shutdown amounted to an unconstitutional taking of their property. A taking would have required the state to provide the bar owners with just compensation. Appellate judges also rejected bar owners’ request for attorneys’ fees under the Public Records Act.

The decision reverses part of Wake County Superior Judge James Gale’s ruling. He decided the case entirely in Cooper’s favor in March 2022. The lawsuit will head back to a trial judge for further proceedings.

The governor issued an executive order shutting down all bars in North Carolina in March 2020. In May, a new executive order — No. 141 — allowed some type of bars to reopen with safety precautions. Private bars, including those involved in the lawsuit brought by the North Carolina Bar and Tavern Association, had 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,” wrote Judge April Wood for the unanimous court. “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 weconsider 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,” Wood explained. “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.”

Wood detailed the Appeals Court’s reasons for upholding the bar owners’ claim that Cooper violated their right to the enjoyment of the “fruits of their labor.”

“Our careful review of the Record does not reveal the existence of any scientific evidence demonstrating Plaintiffs’ bars, as opposed to the bars located in other establishments serving alcohol, posed a heightened risk at the time Executive Order No. 141 was issued,” she wrote. “Even if we assume the materials submitted by Defendant address higher risks of COVID-19 infections in locations where alcohol is served and people gather, these materials do not include any distinctions between different types of bars.”

“Defendant points us to Executive Order No. 188 in which he states that ‘studies have shown that people are significantly more likely to be infected with COVID-19 if they have visited a bar or nightclub for on-site consumption.’ First, we note that Executive Order No. 188 was issued 6 January 2021, and Executive Order No. 141 was issued 20 May 2020, meaning that this purported scientific rationale for closing private bars but no other types of bars was over seven months delayed. Second, Defendant cannot reasonably rely on his own assertion within an executive order as though it were itself a scientific study,” Wood explained.

Wood noted the governor’s reliance on news articles to bolster his case. “’Research’ such as these news articles could be conducted by private citizens utilizing Internet search engines. In fact, many of the documents in the Record were gathered from Internet searches as evidenced by the tags and links at the bottom of the printed pages,” she noted. “Excepting one, none of the documents purport to be scientific studies.”

The only scientific study in the record “does not differentiate between various types of bars,” Wood added. Plus the study was published in September 2020, four months after the challenged executive order.

“Overall, the articles and data submitted by Defendant entirely fail to address any differences in the risk of spread of COVID-19 between the bars he allowed to reopen and Plaintiffs’ bars which remained closed,” Wood wrote. “Defendant has not demonstrated any logic in the complete closure of bars for on-premises service when the same measures that allowed other types of bars, such as hotel and restaurant bars, to open could have been applied to the operation of those businesses.”

“Allowing restaurants and some types of bars to reopen with restricted capacity while simultaneously prohibiting Plaintiffs’ bars from reopening in like manner was arbitrary and capricious,” Wood added. “The continued closure of Plaintiffs’ bars while permitting other similar establishments to reopen under certain conditions violated Plaintiffs’ right to enjoy the fruits of their own labor from the operation of their respective businesses. Therefore, the unequal treatment of Plaintiffs compared to other similar establishments was illogical and not rationally related to Defendant’s stated objective of slowing the spread of COVID-19.”

Wood explained why the May 2020 executive order also violated the bar owners’ rights to equal protection of the laws.

“It is illogical and arbitrary to attempt to achieve Defendant’s stated health outcomes by applying different reopening standards to similarly situated businesses that could have complied with those standards,” Wood wrote. “In other words, if restaurants serving alcohol could operate at fifty percent capacity and keep groups six feet apart with both food and alcohol at the customers’ tables, Defendant has failed to present any forecast of evidence of any reason bars would not be able to do the same with alcohol service.”

“Therefore, Executive Order No. 141 was underinclusive for not allowing bars to participate in the same phased reopening as restaurants that serve alcohol,” Wood added. “The unequal treatment of Plaintiffs had the effect of denying their fundamental right to earn a living by the continued operation of their businesses.”

Judges Donna Stroud and Jefferson Griffin joined Wood’s opinion.

The NC Bar and Tavern case marks the second time the Appeals Court has addressed bar owners’ concerns about the COVID shutdowns. In September 2023, a split Appeals Court panel ruled, 2-1, that a separate lawsuit called Howell v. Cooper could move forward. Wood wrote the majority opinion in that case as well.

Cooper appealed that decision to the state Supreme Court. The high court has not decided whether to take the case.