In March of 2020—during the early stages of the COVID-19 pandemic—North Carolina Governor Roy Cooper declared a state of emergency.[1] On May 20, 2020, the Governor invoked his emergency authority to issue Executive Order 141, temporarily prohibiting all “mass gatherings” in the state. The order defined a “mass gathering” as “an event or convening that brings together more than ten (10) people indoors or more than twenty-five (25) people outdoors at the same time in a single confined indoor or outdoor space, such as an auditorium, stadium, arena, or meeting hall.”[2]

Ace Speedway, a large outdoor racetrack located in Alamance County, North Carolina, had planned to host its first race of the season on May 23, 2020, shortly after Executive Order 141 took effect.[3] Robert Turner—one of the owners of Ace Speedway—publicly denounced the order, stating that “unless they can barricade the road,” he intended to host the race.[4]

Ace Speedway went through with hosting its first race of the season on May 23 and planned to host a second race the following week.[5] After learning that the racetrack had not complied with the order, the Governor sent a letter to the Alamance County Commissioners and the Sheriff, advising them that Ace Speedway was violating the order. When that failed to stop the races, the Secretary of the North Carolina Department of Health and Human Services issued an abatement order requiring Ace Speedway to stop the races and notify the public that all upcoming races were cancelled.[6] When that failed, the Department of Health and Human Services filed a lawsuit against Ace Speedway, seeking injunctive and declaratory relief.[7]

Ace Speedway and its operators answered the complaint and asserted several counterclaims against the state for (1) violation of their right to earn a living under the North Carolina Constitution’s “Fruits of Their Labor” Clause and (2) violation of their right to be free from selective enforcement under the North Carolina Constitution’s equal protection guarantee. The counterclaims alleged that the state unfairly targeted Ace Speedway because of Turner’s public comments denouncing the executive order. While it issued an abatement order to Ace Speedway, the state allegedly failed to take similar enforcement actions against other venues that had not spoken out against the Governor’s policies.[8]

The state moved to dismiss Ace’s counterclaims as barred by the doctrine of sovereign immunity. The trial court denied the state’s motion to dismiss, and the North Carolina Court of Appeals affirmed.[9]

In an opinion authored by Justice Robert Dietz, the North Carolina Supreme Court affirmed the Court of Appeals’ denial of the state’s motion to dismiss.[10]

First, the court held that the doctrine of sovereign immunity did not bar Ace Speedway’s claims. Normally, the question in a sovereign immunity case is whether the state has “consented or waived its immunity” under North Carolina law.[11] But when a citizen claims a violation of the North Carolina Constitution, a different set of rules applies.

Under Corum v. University of North Carolina,[12] a citizen may sue the state for violation of the North Carolina Constitution notwithstanding sovereign immunity.[13] Such “Corum claims” have three requirements: (1) the claimant must allege “that a state actor violated the claimant’s state constitutional rights”; (2) the claimant must “present facts sufficient to support an alleged violation of a right protected by the State Constitution”; and (3) there must be “no adequate state remedy” for the alleged constitutional violation.[14]

The state agreed that Ace Speedway alleged a violation of the state constitution and that there was no adequate alternative remedy. Thus, the question for the court was whether Ace Speedway had alleged facts “sufficient to support an alleged violation of a right protected by the State Constitution.”[15]

Second, the court held that Ace Speedway plausibly alleged that the state’s abatement order violated of Article I, Section 1 of the North Carolina Constitution—otherwise known as the “Fruits of Their Labor” Clause.[16] Section 1 provides that all citizens are entitled to, among other rights, “the enjoyment of the fruits of their own labor.”[17] For a state action to pass muster under Section 1, there must be (1) a “proper governmental purpose” for the action and (2) “reasonable” means “chosen to effect that purpose.”[18] Critically, the first step of the inquiry requires the court to review the “actual purpose for the constraint,” not any hypothetical rationale that would support its constitutionality.[19] 

Applying the rule to the case at hand, the “central allegation” of Ace Speedway’s claim was that the true “purpose of the abatement order was not to protect public health, but to retaliate against [it] for criticizing the Governor.”[20] Thus, taking Ace Speedway’s allegations as true, the abatement order was not issued for a proper governmental purpose. Nor had the state chosen reasonable means to effect that purpose, as the counterclaim alleged that similar businesses violated the same order, but did not face similar enforcement action.[21] Thus, the court held that Ace Speedway plausibly asserted a “Fruits of Their Labor” claim against the state.

Third, the court held that Ace Speedway had plausibly alleged a violation of the state constitution’s Equal Protection Clause.[22] To state a claim for selective enforcement under the Equal Protection Clause, a claimant must allege that an enforcement action was “motivated by a discriminatory purpose,”[23] such as the exercise of the claimant’s constitutional rights,[24] and that the action had a “discriminatory effect,” meaning the claimant was “singled out and treated differently.”[25] Under this standard, Ace plausibly alleged that the state was motivated by a discriminatory purpose—disliking Robert Turner’s exercise of his First Amendment right to criticize the government—and caused a discriminatory effect by singling out Ace Speedway for enforcement. Thus, the court held that Ace Speedway had plausibly asserted a claim under the Equal Protection Clause.[26]

Lastly, the court rejected the state’s argument that Ace Speedway’s claim failed because it sought money damages. Under Corum, the court must “minimize encroachment upon other branches of government—in appearance and in fact—by seeking the least intrusive remedy available and necessary to right the wrong.”[27] The state argued that Ace’s request for money damages was not the “least-intrusive remedy for the constitutional violations.”[28] But according to the court, this argument was premature. The least-intrusive remedy limitation arises only “after the claimant proves a constitutional violation.”[29] Since the court was at the motion to dismiss stage, the state’s argument was not yet “ripe for review.”[30]

While the court held that Ace Speedway had asserted several plausible constitutional claims, Justice Dietz ended with an important caveat:

The case has barely begun. The only question reviewable at this early stage of the case is whether Ace Speedway has sufficiently alleged a valid Corum claim, thus piercing the State’s sovereign immunity and permitting it to bring the State into court to litigate the matter.[31]

While Ace Speedway’s claim survived a motion to dismiss, it may fail at a later stage in the litigation.

Rather than affording states the benefit of the federal “hypothetical” rational basis review, the North Carolina Supreme Court appears to have charted a narrower path for state governments, examining the “actual purpose” of the state action rather than its hypothetical rationale, at least for the purpose of determining whether a claim against the state may proceed despite sovereign immunity.[32] Another recent North Carolina Supreme Court case, Singleton v. North Carolina Department of Health and Human Services,[33] similarly involved a challenge to North Carolina’s Certificate of Need laws under the Fruits of Their Labor Clause. While the court did not reach the issue, remanding the case on procedural grounds, we are likely to see more Fruits of Their Labor Clause challenges in the future.

[1] Exec. Order No. 116, 34 N.C. Reg. 1744–49 (Mar. 10, 2020).

[2] Exec. Order No. 141, 34 N.C. Reg. 2360 (May 20, 2020).

[3] Kinsley v. Ace Speedway Racing, Ltd., 904 S.E.2d 720, 724 (N.C. 2024).

[4] Id.

[5] Id.

[6] Id. at 725.

[7] Id.

[8] Id.

[9] Id.

[10] Id. at 724.

[11] Est. of Graham v. Lambert, 898 S.E.2d 888, 895 (N.C. 2024).

[12] 413 S.E.2d 276 (N.C. 1992).

[13] Id. at 289–91.

[14] Deminski ex rel. C.E.D. v. State Bd. of Educ., 858 S.E.2d 788, 793–94 (N.C. 2021) (citations omitted).

[15] Kinsley, 904 S.E.2d at 726.

[16] Id. at 726; see generally N.C. Const. art. I, § 1.

[17] N.C. Const. art. I, § 1.

[18] Poor Richard’s, Inc. v. Stone, 366 S.E.2d 697, 699 (N.C. 1988).

[19] Kinsley, 904 S.E.2d at 726–27 (citation omitted).

[20] Id. at 728.

[21] Id.

[22] Id. at 728–29; see generally N.C. Const. art. I, § 19.

[23] State v. Garner, 459 S.E.2d 718, 726 (N.C. 1995) (citation omitted).

[24] State v. Ward, 555 S.E.2d 251, 261 (N.C. 2001) (citations omitted).

[25] Kinsley, 904 S.E.2d at 729.

[26] Id.

[27] Corum, 413 S.E.2d at 290.

[28] Kinsley, 904 S.E.2d at 729.

[29] Id. at 729–30 (emphasis in original) (citations omitted).

[30] Id. at 730.

[31] Id.

[32] Id. at 726.

[33] 906 S.E.2d 806 (N.C. 2024).

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