N.C. Appeals Court judges weigh next steps for lawsuit challenging Opportunity Scholarships

N.C. Appeals Court Judges Toby Hampson, left, Richard Dietz, and April Wood listen to oral arguments. (Image from N.C. Court of Appeals YouTube channel)

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  • The N.C. Court of Appeals will decide whether a lawsuit challenging North Carolina's Opportunity Scholarship program will stay with a single trial judge or move to a three-judge panel.
  • The lawsuit could affect more than 20,000 students using Opportunity Scholarships today. As of mid-May, the program has received more than 14,700 new applications.

A procedural decision from the N.C. Court of Appeals could help decide the future of the state’s Opportunity Scholarship Program. The court’s decision could affect thousands of N.C. families who use scholarships to send their children to private schools.

An appellate panel heard oral arguments Wednesday about whether a lawsuit challenging the OSP should proceed before a single Wake County judge or a three-judge panel. The decision hinges on the type of constitutional challenge the suit represents. Do the plaintiffs challenge the law creating the OSP or the way that law has been implemented? In legal terms, it’s the difference between a “facial” constitutional challenge or an “as-applied” challenge.

“The most important thing in determining ‘facial’ or ‘as applied’ is the breadth of the remedy,” said Judge Richard Dietz near the end of the hourlong hearing. “If it turns out that the remedy that courts would need to impose here to remedy the constitutional violations you’ve alleged would be so broad that it’s effectively facial, everything that the Superior Court judge who’s currently adjudicating this case has done would be void.”

“That court would not have subject-matter jurisdiction,” Dietz added. “So that’s a pretty big reason for us to make sure we’re getting this to the right court.”

Democratic N.C. Attorney General Josh Stein’s state Justice Department, the Republican-led General Assembly, and scholarship defenders working with the Institute for Justice all argue for the case to move to a three-judge panel.

Their lawyers all agree that the lawsuit represents an attack on the OSP program as a whole. They accuse plaintiffs of mislabeling the lawsuit as an as-applied challenge.

Laura McHenry at N.C. Court of Appeals
Attorney Laura McHenry of the N.C. Justice Department argues at the N.C. Court of Appeals. (Image from N.C. Court of Appeals YouTube channel)

“We’re applying a principle that goes back to Shakespeare, right?” said Laura McHenry of the N.C. Justice Department. She helps represent the N.C. State Education Assistance Authority, the government agency that oversees OSP. “’A rose by any other name would smell as sweet.’ The label that is provided by a plaintiff is not the determining factor.”

“What plaintiffs seek here is a remedy that would reach far beyond just these plaintiffs,” McHenry added. “The remedy sought would invalidate the entire program. They’ve asked that the court declare the program unconstitutional. … This would shut down hundreds of schools and affect thousands of North Carolina students.”

Matthew Tilley at N.C. Court of Appeals
Attorney Matthew Tilley argues for N.C. legislators at the N.C. Court of Appeals. (Image from N.C. Court of Appeals YouTube channel)

Legislative attorney Matthew Tilley agreed. “This complaint and claims can be nothing other than facial,” he said. “None of the plaintiffs allege they applied for the program. None of the plaintiffs allege they attempted to attend a school. In fact, at least one of these plaintiffs is the president of the North Carolina Association of Educators. I seriously doubt that she was seeking to go to a private school or send her kids there, and she doesn’t allege it.”

Lead plaintiff Tamika Walker Kelly is president of NCAE, the state branch of a national teachers union. Teachers unions have been among the most vocal opponents of parental school choice programs like OSP.

Marie Miller at N.C. Court of Appeals
Marie Miller of the Institute for Justice argues at the N.C. Court of Appeals. (Image from N.C. Court of Appeals YouTube channel)

“The plaintiffs’ claims, if successful, would require a court to narrow the schooling options that the program’s statutes provide on their face,” said IJ attorney Marie Miller. She represents families who have intervened in the case to defend OSP. “It would require that those options be narrowed for every single parent across the state.”

On the other side of the argument, Paul Smith argued that the plaintiffs are not trying to invalidate the law creating Opportunity Scholarships. They want courts to step in and force state government to stop funding private schools that discriminate against them.

Paul Smith at the N.C. Court of Appeals
Attorney Paul Smith argues at the N.C. Court of Appeals. (Image from N.C. Court of Appeals YouTube channel)

“The General Assembly had the authority to enact this statute. We don’t contend otherwise,” Smith said. “The trial court’s job is going to be to remedy the constitutional violation, which in this case would mean that the State Educational Assistance Authority needs to stop funding a certain subset of schools which say our doors are closed to you because you believe something differently than what we believe.”

Dietz expressed skepticism about a court’s ability to address the plaintiffs’ concerns without addressing the OSP law as a whole.

“The statute requires them to fund those schools,” he said. “Wouldn’t the legislature have to make some change to the statute in order to address the court ruling? That would mean the existing statute is facially unconstitutional.”

“This isn’t the same as the sort of scenario where we’re declaring one part of a statute unconstitutional, but the statute itself can still function in other applications,” Dietz explained.  “The structure of the program in the statute is any school that you want to attend you can get the scholarships.”

“If we as the court system are trying to step in and start providing rules to an agency that the legislature hasn’t authorized to do these things, … we’ve gone far beyond what the legislature authorized in the statute,” the judge said. “That seems to me like we’d be saying the statute is unconstitutional. It needs to have more in there.”

More than 20,000 students use Opportunity Scholarships now to attend more than 500 private schools across North Carolina. State lawmakers recently increased both the size of the scholarship and the upper bounds of income eligibility. As of mid-May, the program had received more than 14,700 new applications for 2022-23, according to Parents for Educational Freedom in North Carolina. The program had 16,751 new applications for the 2021-22 school year, with more than 15,000 families renewing scholarships that year.

The Opportunity Scholarship Program has survived an earlier constitutional challenge. The N.C. Supreme Court ruled, 4-3, in 2015 that the program could proceed.

There’s no timetable for Dietz and fellow Appeals Court Judges Toby Hampson and April Wood to issue a decision.