Bars rebut Cooper’s arguments about COVID compensation

North Carolina bar owners suing Gov. Roy Cooper over his decision to keep bars closed during the COVID-19 pandemic made the case this week for compensation from the state.

The state Supreme Court will hear oral arguments on Oct. 23 in NC Bar and Tavern Association v. Cooper. It’s one of two cases at the state’s highest court that day pitting the governor against bar owners. It’s one of eight cases the court will hear on Oct. 22-23 related to the COVID pandemic.

Cooper’s lawyers have argued against the state paying bar owners any compensation for losses linked to the extended government-mandated shutdown of their businesses.

“Regarding the Plaintiffs’ claim for compensation under the Emergency Management Act (‘EMA’), the Governor urges this Court to read into the statute a rule requiring that the State take physical possession of the Plaintiffs’ property in order to trigger the Act’s compensation provision,” the Bar and Tavern Association’s lawyers wrote in a brief filed Wednesday.

“However, this argument relies upon an artificially narrowed construction of the broad wording of the statute’s sole remedial provision and seeks to award the Governor expansive powers to take action impacting only a subset of a single industry to benefit the entire population of the State at the sole expense of the targeted business owners and employees,” the court filing continued.

“Under the EMA, the State is obligated to compensate persons whenever an executive order entered under the Act results in their property being ‘commandeered, seized, taken, condemned, or otherwise used in coping with an emergency,’” lawyers for the bar owners wrote.

Cooper’s interpretation of the state law “notably ignores the dictionary definition of ‘condemn’ as including ‘to declare unfit for use or service,’” according to the court filing.

“In this case, the Governor ordered that the Plaintiffs’ businesses remain closed for more than a year, purportedly based on the proposition that their operation (even while similarly situated businesses could open) would constitute a public health hazard,” bar owners argued. “The Governor condemned the Plaintiffs’ businesses in the same meaning of that word in which a county health department might condemn a restaurant whose food handling facilities are inadequate in ways that risk transmission of disease.”

State law did not require the government to take “physical possession” of the bars before owners could seek compensation, the court filing continued. “Rather than read into the statute a physical possession requirement, this Court should give the same expansive reading of the compensation provision that the Governor gave to the provisions of the EMA giving the Governor powers to act by Executive Order after declaring the existence of an emergency.”

“The Governor’s overly narrow reading of the EMA’s broad list of compensation triggers would deprive the Act’s lone compensation provision of much of its ability to require fair treatment and act as a deterrent to government overreach,” bar owners argued.

If the state Supreme Court rejects payment of bar owners under the Emergency Management Act, justices still could determine that state government engaged in a taking of property under the state constitution’s “law of the land clause,” the brief argued.

“[T]he Governor contends that there was no compensable taking here because the Governor’s actions ‘promoted “public health, safety and welfare”’ and because the bar owners could have put their property to some other practical use in the approximately 14 months they were closed by gubernatorial mandate,” the court filing alleged.

Had the state seized a medical device supplier’s respirators or an entire medical office building for a temporary hospital, the state would have to compensate the affected property owners. Bar owners argued that the “health” argument does not free the governor from compensating them for their losses.

“The Governor’s argument that the Plaintiffs could have put their properties to other practical use is also fundamentally flawed,” the court filing continued. “The Governor did not issue a single Executive Order directing that the Plaintiffs close their businesses for 14 months. Rather, the Governor mandated closure of the Plaintiffs’ businesses in short increments, with the initial closure repeatedly extended by an additional nineteen two-to-four-week periods of time, with each such extension ordered just before the prior order was set to expire.”

“The Governor cavalierly argues that the Plaintiffs could have put their properties to some other practical use during the mandated closure but have suggested no examples of what uses the Governor thinks a bar owner could make of their property during a series of perpetual but uncertain in duration 1-month or less closures,” bar owners’ lawyers wrote.

“In this case, the Governor’s Executive Orders did to the Plaintiff bar owners exactly what our Supreme Court says triggers a right to compensation,” the brief argued. “The Governor decided closure of the Plaintiffs’ businesses would benefit the people of North Carolina by slowing the spread of COVID 19. The Plaintiffs’ Constitutional taking claim asks that the people of North Carolina, who received this benefit, also bear the cost rather than leaving the Plaintiff bar owners to bear that cost alone.”

An April 16 state Appeals Court ruling held that the governor had violated bar owners’ state constitutional rights to the enjoyment of the fruits of their labor and equal protection of the laws.

At the same time, appellate judges rejected the bar owners’ argument that the shutdown amounted to an unconstitutional taking of their property. Appellate judges also rejected bar owners’ request for attorneys’ fees under the Public Records Act.

The decision reversed part of Wake County Superior Judge James Gale’s ruling. He decided the case entirely in Cooper’s favor in March 2022.

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 a unanimous three-judge Appeals Court panel. “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,” 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.

“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 marked the second time the Appeals Court addressed bar owners’ concerns about COVID-related 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.