Justice hopes new test puts NC governments on notice

Government has the power to tax, regulate, and toss you in jail if you break the law.

But its power is not absolute.

At least one member of North Carolina’s highest court hopes a unanimous decision this summer sent a message to state government: Beware of encroaching on fundamental state constitutional rights.

On Aug. 23, the North Carolina Supreme Court put sometimes-heated philosophical differences aside in Kinsley v. Ace Speedway Racing. Each justice agreed that owners of an Alamance County racetrack could proceed with a lawsuit against state government officials.

Ace argued that Gov. Roy Cooper’s top health adviser shut the racetrack down during the COVID-19 pandemic because a track owner had criticized Cooper publicly. The government responded that legitimate health and safety concerns prompted the shutdown.

The high court did not settle the dispute. But justices agreed that the government could not win simply by uttering the words “public health.”

Two months after the Ace Speedway ruling, justices considered two more cases pitting the governor against business owners. This time, private bars challenged Cooper’s decision to keep them closed during the pandemic as other businesses reopened. Among the reopened businesses were bars in restaurants, breweries, and country clubs.

Justice Richard Dietz authored the Ace Speedway opinion. He explained on Oct. 23 how the two-month-old precedent could influence the bar shutdown cases. Dietz distinguished the new Ace Speedway “test” from the judicial term “rational basis.”

“One key difference is we are going to ask what is the actual government purpose” when it limits economic rights, Dietz said. Plaintiffs can try to prove that the government “isn’t being honest about what the purpose is. There’s some other purpose that may be improper.”

Even with a proper purpose, the government might not win, Dietz explained. “The next step is this fact-intensive question of degree where you examine what are … all the alternatives that the state could have chosen — understanding that there are these alternatives that have different burdens and benefits. Is the one the state picked reasonable in light of all those other options?”

“In traditional rational-basis review, you do not do that,” he continued. “You ask in isolation: Was it rational to do this? Even if every other option is so much better that you would see this is a really dumb choice the government made, it would still survive ‘rational basis.’”

“But it would not survive the test articulated in Ace Speedway,” Dietz said. “Don’t we maybe need to think of this as the ‘fruits of their labor’ test now, and not the rational basis test?”

Fruits of their labor?

Article I, Section 1 of the Declaration of Rights in the North Carolina Constitution guarantees the rights to “life, liberty, the enjoyment of the fruits of their own labor, and the pursuit of happiness” — adding a clear economic right to those in the Declaration of Independence.

State Deputy Solicitor General Jim Doggett warned that Dietz’s test marked an “extraordinary departure” from North Carolina courts’ treatment of economic rights “going back a century.”

“An enormous amount of what the state does in terms of law and regulation touches in one way or another on the right to earn a living,” he said. “You might say that’s the main thing the General Assembly regulates — the economy.”

Dietz fired back.

“We the people created this very unique protection of economic liberty in North Carolina,” he said. The right has been articulated clearly “just recently” with the Ace Speedway ruling.

“Now the government understands. The state knows that — just like everybody else — it needs to act reasonably,” Dietz explained. “It can’t just assume that as long as I’m not wholly arbitrary in what I’m doing I’m immune from any challenge that I’m violating this fundamental right.”

“Bureaucrats and regulators in the state will now know: I need to think carefully about the different options and try to choose one where there’s a good fit between the purpose we’re trying to achieve and the way we try to achieve it,” he predicted.

When government fails to act reasonably, courts will find state constitutional violations and hold officials accountable, Dietz added.

“I think the result of that will be better government regulation, better lawmaking, better everything coming from our government because they’ll act reasonably,” he said. “I don’t see a structural problem at all. I think this could be a wonderful thing.”

It’s unclear whether the state Supreme Court will maintain unanimity in defending economic rights. But the Ace Speedway “test” could mean good news for your right to earn a living in North Carolina.

Mitch Kokai is senior political analyst for the John Locke Foundation.