Retaliation claim gains credence with court; ACE relies on state constitution’s guarantee to “the enjoyment of the fruits of their own labor” as one of its “inalienable rights”
“ACE has sufficiently pled that the secretary singled its racetrack out for enforcement in bad faith for the invidious purpose of silencing its lawful expression of discontent with the governor’s actions.”
– N.C. Court of appeals ruling
The last vestige of North Carolina’s anti-Covid restrictions were quietly retired last month when Governor Roy Cooper lifted a two-year-old state of emergency that had followed the arrival of the coronavirus pandemic.
Yet, the end of these public health mandates doesn’t seem to have sapped the momentum of a legal crusade that the owners of ACE Speedway in Altamahaw have waged against the state over their venue’s forced closure during the opening months of the pandemic.
On Tuesday, a three-judge panel with North Carolina’s Court of Appeals effectively gave this case a fresh injection of fuel when it unanimously refused to dismiss ACE’s legal complaints in deference to a request from the state’s secretary of health and human services.
The secretary had previously asked a lower court to dismiss the case based on the alleged implausibility of the racetrack’s core claim that the state had violated its own constitution when it compelled the venue to shut down in the summer of 2020.
According to ACE’s attorneys, the N.C. Department of Health and Human Services had breached two state constitutional provisions that prohibit the government from selectively enforcing the law and depriving its citizens of the “fruits of their labor.” The department’s secretary had argued that these claims lacked constitutional “color” – that, even at first blush, they didn’t have any legal credibility at all.
State’s motion for dismissal rejected in Alamance County superior court; state appeals
Last year, John M. Dunlow, a visiting superior court judge in Alamance County, rejected the state’s arguments for the case’s dismissal. This ruling has now been upheld by the state’s Court of Appeals – as spelled out in a 24-page decision that Judge Jefferson Griffin authored on behalf of the three judge-panel which heard the matter in March.
“In this appeal, we are asked to decide whether ACE has presented colorable constitutional claims for which our courts could provide a remedy,” Griffin asserts in his ruling, with the concurrence of fellow appeals court judges Jeffrey Carpenter and Fred Gore. “We hold that ACE pled each of its constitutional claims sufficiently to survive the secretary’s motion to dismiss. We affirm the [Alamance County superior] court’s order.”
The legal dustup between ACE and the state ultimately dates back to the spring of 2020 when the speedway’s owners announced that they would resume racing following a two-month, pandemic-induced shutdown of North Carolina’s “nonessential” businesses.
Capping crowds at racetrack was unreasonable, according to ACE
Despite the end of the shutdown, the state continued to cap crowd sizes at outdoor sporting events at a maximum of 25 people. ACE, for its part, had made preparations to host much larger audiences based on earlier consultations with state and local health department officials. The venue consequently drew some 2,550 spectators when it resumed operations in late May of 2020 – attracting the immediate ire of officials at the state level.
Over the next couple of weeks, ACE held two more well-attended events while its owners publicly spoke out in defiance of the state’s limitations on crowd sizes. In the meantime, other speedways also bucked these crowd-size restrictions by partitioning their seating into 25-person units – a ploy that didn’t elicit any pushback from officials in Raleigh. But the state’s top brass took a much sterner line against the Altamahaw racetrack’s non-compartmentalized seating arrangements.
On June 8, 2020, Mandy Cohen, the state’s then-secretary of health and human services, issued an abatement order that instructed ACE to suspend its operations while the crowd-size restrictions remained in effect. Three days later, judge Tom Lambeth, the county’s senior resident superior court judge, issued an injunction in line with the secretary’s order that effectively put the brakes on the racetrack’s activities.
That August, ACE filed a legal response to the secretary’s order in which it outlined, for the first time, its constitutional counterclaims against the state. Less than two weeks later, the secretary of health and human services abandoned her legal case against ACE after the governor had replaced the 25-person cap with a less onerous set of crowd-size restrictions.
In December of 2020, the state asked the courts to dismiss the racetrack’s counterclaims based on assertions of sovereign immunity as well as the belief that ACE’s arguments lacked constitutional “color.” In January of the following year, Superior Court Judge John Dunlow rejected the state’s motion to dismiss ACE’s case. This ruling paved the way for state’s subsequent appeal to the second highest court in North Carolina – and ultimately to the decision that Judge Jefferson Griffin issued on Tuesday for the N.C. Court of Appeals.
In his ruling, Griffin declares that, in order to survive the state’s motion to dismiss, the racetrack must invoke a “state actor” that allegedly violated its rights. It also has to present “colorable” claims of constitutional violations, and finally, it must show that there is no adequate remedy for the violation short of a direct claim under the state constitution.
Griffin goes on to consider the inherent plausibility of ACE’s constitutional claims. The first of these claims states that the secretary of health and human services denied the racetrack’s owners “the enjoyment of the fruits of their own labor” – which appears in the state constitution as one of the “inalienable rights” of North Carolina’s citizens. Although Griffin concedes that this provision was initially meant to restrain the state legislature, he argues that ACE has “pled a colorable, though admittedly novel, claim for government intrusion” by a state-level administrative official.
“It naturally follows,” he adds, “that actions taken by other non-legislative state actors, whether elected officials or unelected bureaucrats, may run afoul of a citizen’s right to the fruits of his own labor when they arbitrarily interfere with occupations, professions, or the operations of business.”
The judge also finds sufficient reason to pursue the racetrack’s other constitutional claim to selective enforcement. He notes that in its argument for dismissal, the state insists that the racetrack has “failed to plead both that it was ‘singled out” for prosecution…and that the secretary acted invidiously in ‘bad faith.’” Griffin adds that the state has placed “special emphasis on ACE’s failure to track [this] specific language” in advancing its claims.
“We have held,” he nevertheless continues, “that a party need not use magic words to plead the substantive elements of its claim.”
Griffin also disputes the state’s comparison of ACE’s claim for selective enforcement to another, ultimately unsuccessful, case brought by a convicted tax violator. Although the judge acknowledges the similarities between the two cases, he points out that the tax violator had failed to make his case at trial while thee racetrack has not yet had the opportunity to appear at a full trial.
“Here, we are tasked only with determining whether ACE has sufficiently pled the substantive elements of the claim,” he insists. “ACE has sufficiently pled that the secretary singled its racetrack out for enforcement in bad faith for the invidious purpose of silencing its lawful expression of discontent with the governor’s actions.”
According to Chuck Kitchen, an attorney who has represented ACE in this case, the ruling issued by the Court of Appeals could clear the way for his clients to present their claims in more detail at trial.
“The next step will be going into [the pre-trial process of] discovery,” he added in an interview Tuesday, “unless the [state] supreme court takes the case, assuming the state goes to the supreme court, and I don’t know that they will.”
