The Forbidden Fruit Revisited: N.C. Supreme Court Unanimously Reaffirms Right to Earn a Living
Two years ago, I discussed the North Carolina Court of Appeals’ opinion in Kinsley v. Ace Speedway, Ltd., a major decision that broadened the scope of a unique constitutional provision that protects the right of North Carolinians to earn a living. While the past two years have proven problematic for civil liberties protected by the Constitution of the United States, the Supreme Court of North Carolina affirmed the Court of Appeals’ decision in Kinsley and, in so doing, expanded the unique protections afforded by North Carolina’s Declaration of Rights.
Unlike the federal Constitution, or any other state constitution in the United States, the North Carolina Constitution explicitly protects the right of citizens to freely engage in any legitimate business, occupation, or trade.[1] Emphasizing the importance of this unique right, the framers of North Carolina’s Constitution placed it first in North Carolina’s Declaration of Rights. Article I, Section 1 provides that it is “self-evident that all persons . . . are endowed by their Creator with certain inalienable rights; that among these are life, liberty, the enjoyment of the fruits of their own labor, and the pursuit of happiness.”
In 1868, the same year the Fourteenth Amendment to the United States Constitution was ratified, the “fruits of labor clause” was adopted when “formerly enslaved persons were newly able to work for their own benefit.”[2] In enshrining constitutional protections for the “self-evident” right to earn a living, the framers of North Carolina’s Constitution may have intended to “strike an ideological blow at the slave labor system.”[3]
Since its enactment, the fruits of labor clause was largely ignored except for within the context of the State’s professional licensing powers.[4] Then, in 2018, the North Carolina Supreme Court published a landmark decision in Tully v. City of Wilmington, 370 N.C. 527, 810 S.E.2d 208 (2018), where it held that a municipal police department violated a public employee’s constitutional right to enjoy the fruits of his own labor when it failed to follow its own promotional procedures. Since Tully, every time a North Carolina appellate court has had occasion to address the protections provided by the fruits of labor clause, it has affirmed they are expansive.[5]
One question, however, eluded North Carolina’s courts: what is the proper analysis for a fruits of labor claim? The test announced in Tully seemed to only apply in the employment setting.[6] This narrow focus left lower courts struggling to decide how to analyze fruits of labor claims in other contexts.
On August 23, 2024, the North Carolina Supreme Court clarified this ambiguity. Expanding the narrow test announced Tully, the Supreme Court indicated that when addressing fruits of labor claims, it will conduct a twofold inquiry: “is there a proper governmental purpose for the [state action], and (2) are the means chosen to effect that purpose reasonable?”[7]
Turning to the facts underlying the dispute, on May 20, 2020, Governor Cooper issued an executive order prohibiting all outdoor gatherings of more than 25 people. The order had the effect of shutting down Ace Speedway’s operations. The racetrack owners, however, were undeterred. Jason Turner, the racetrack’s owner, told the press:
“[U]nless they can barricade the road, I’m going to [race.] The racing community wants to race. They’re sick and tired of the politics. People are not scared of something that ain’t killing nobody. It may kill .03 percent, but we deal with more than that every day, and I’m not buying it no more.”
Ace Speedway kept its word, and racing resumed on May 23, 2020. The Governor’s office requested that the Alamance County Sheriff, Terry Johnson, put an end to the races, but Sheriff Johnson publicly stated that he would not enforce the Governor’s executive order. The North Carolina Department of Health and Human Services then intervened.
Even though Ace Speedway installed plexiglass and six-feet distance markers, utilized contact tracing and touchless thermometers, and established screening booths—all in consultation with local health officials—DHHS filed a complaint and motion for temporary restraining order seeking to enjoin Ace Speedway from holding any further races on the basis that Ace Speedway was an “imminent hazard” to public health. DHHS’ motion was granted. Ace Speedway then filed a counterclaim against DHHS, including a claim alleging that DHHS violated Ace’s right to enjoy the fruits of its labor by prohibiting it from conducting any business. The trial court denied DHHS’s motion to dismiss and allowed Ace Speedway’s claim to proceed, and the Court of Appeals affirmed.
On appeal to the Supreme Court, the Court articulated and applied its new fruits of labor analysis, and affirmed the decision of the Court of Appeals. With respect to the first factor, DHHS argued that “can be little question that the order seeks to achieve ‘a proper governmental purpose’ because ‘protecting North Carolinians from a novel virus—a virus that would eventually kill over one million Americans” is a proper governmental purpose.’”[8] The Supreme Court, however, rejected this argument and emphasized that Ace Speedway’s allegations, at the motion to dismiss stage, were taken as true. As alleged by Ace Speedway, the purpose of the executive order was to retaliate against the Speedway for criticizing the governor. Taken as true, this allegation “would establish that the State did not pursue a proper governmental purpose because its purpose was not to protect the public interest, but to punish a private business for standing up to the government.”[9]
Turning to the second factor, DHHS asserted that the means to achieve its stated purpose of combatting the spread of COVID-19 were reasonable because “large mass gatherings at places like racetracks presented an elevated risk for spreading COVID-19.” The Supreme Court again emphasized, however, that Ace Speedway’s allegations were taken as true at the motion to dismiss stage. According to the Speedway, the State enjoined only Ace Speedway while allowing other similar business to continue operating even though they “present[ed] identical risks to the public.” The Supreme Court explained that the “State’s decision to target Ace Speedway but ignore other businesses posing identical risks is not reasonable.”
The Supreme Court’s decision is remarkable not only because it confirms that fruits of labor claims can be brought by any North Carolinian (not just employees of government agencies), but also because it underscores North Carolina’s liberal notice pleading standard. Unlike the federal judiciary, North Carolina does not adhere to the heightened pleading standards announced in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. Instead, dismissal is only appropriate in North Carolina where “‘it appears beyond doubt that the plaintiff could prove no set of facts in support of his claim that would entitle him to relief.’” Gouch v. Rotunno, 893 S.E.2d 551, 554 (N.C. Ct. App. 2023) (quoting New Bar P’ship v. Martin, 221 N.C. App. 302, 306, 729 S.E.2d 675, 680 (2012)). Thus, although the State’s argument that the executive order was intended to protect North Carolinians from a novel virus during a global emergency is undeniably persuasive (and perhaps even true), the Supreme Court, under the notice pleading standard, refused to go outside the pleadings in evaluating the viability of Ace Speedway’s claims.
Lastly, the Kinsley decision is significant because it was unanimous. This rare bipartisan coalition demonstrates that the question of whether the liberties protected in Article I, Section 1 are, in fact, “inalienable” is not a close one.
The Kinsley decision has opened a Pandora’s box, as, unlike Tully, the test it announced can be applied in any context related to a person’s ability to earn a living. One area that may be significantly affected is whistleblower retaliation. In North Carolina, state employees are protected from retaliation, but the General Assembly has refused to extend these same protections to municipal and county employees who report illegality or other misconduct to their employers. Kinsley, however, may have resolved this shortcoming, as the decision suggests that retaliating against any person who “stand[s] up to the government” is not a proper governmental purpose, and that such conduct may be constitutionally actionable if it affects a person’s employment.[10]
But this is just one possible application for Kinsley’s test. All state actors are now on notice that any decision that impacts a citizen’s employment may potentially be actionable as a “Kinsley claim,” even where the state actor articulates persuasive justifications for the action in a motion to dismiss. Now more than ever, state actors should be wary of encroaching on the forbidden fruit.
[1] The U.S. Supreme Court has previously held that the right to “hold specific private employment and to follow a chosen profession free from unreasonable governmental interference comes within the ‘liberty’ and ‘property’ concepts of the Fifth Amendment.” Greene v. McElroy, 360 U.S. 474, 492, 79 S. Ct. 1400, 1411, 3 L. Ed. 2d 1377 (1959) (collecting cases). In light of the U.S. Supreme Court’s decision to revisit its substantive due process jurisprudence, however, the fate of this right is uncertain.
[2] Mole’ v. City of Durham, 2021-NCCOA-527, ¶ 15, 279 N.C. App. 583, 586, 866 S.E.2d 773, 777, aff’d, ordered not precedential, 384 N.C. 78, 884 S.E.2d 711 (2023) (citing John V. Orth, The North Carolina State Constitution with History and Commentary 38 (1995)).
[3] Id.
[4] See, e.g., State v. Harris, 216 N.C. 746, 6 S.E.2d 854 (1940) (dry cleaning); State v. Ballance, 229 N.C. 764, 51 S.E.2d 731 (1949) (photography); Roller v. Allen, 245 N.C. 516, 96 S.E.2d 851 (1957) (tile installation).
[5] See Molé v. City of Durham, 2021-NCCOA-527, ¶ 29; Howell v. Cooper, 290 N.C. App. 287, 296, 892 S.E.2d 445, 453 (2023); N. Carolina Bar & Tavern Ass’n v. Cooper, 901 S.E.2d 355 (N.C. Ct. App.), review allowed, 901 S.E.2d 232 (N.C. 2024); see also State v. Kelliher, 273 N.C. App. 616, 641, 849 S.E.2d 333, 350 (2020), review allowed, writ allowed, appeal dismissed, 854 S.E.2d 584 (N.C. 2021), and aff’d as modified, 2022-NCSC-77, 381 N.C. 558, 873 S.E.2d 366 (“North Carolina’s Constitution provides that persons’ ‘inalienable rights’ include the ‘enjoyment of the fruits of their own labor,’ . . . and our Supreme Court has recognized that ‘a law which destroys the opportunity of a man or woman to earn a living in one of the ordinary harmless occupations of life . . . is legal grotesquery.’ . . . It is difficult, then, to deny that incarcerating a juvenile with no hope for release until or after the point at which society no longer considers them an ordinary member of the workforce seems to run afoul of the “hope for some years of life outside prison walls[.]’”).
[6] Tully, 370 N.C. at 537, 810 S.E.2d at 216 (“(1) a clear, established rule or policy existed regarding the employment promotional process that furthered a legitimate governmental interest; (2) the employer violated that policy; and (3) the plaintiff was injured as a result of that violation.”).
[7] Kinsley v. Ace Speedway Racing, Ltd., No. 280PA22, 2024 WL 3909391, at *4 (N.C. Aug. 23, 2024).
[8] Kinsley, No. 280PA22, 2024 WL 3909391, at *5.
[9] Id.
[10] Id. (“But this ignores the central allegation in Ace Speedway’s claim—that the purpose of the abatement order was not to protect public health, but to retaliate against Ace Speedway for criticizing the Governor . . . . This allegation, if true, would establish that the State did not pursue a proper governmental purpose because its purpose was not to protect the public interest, but to punish a private business for standing up to the government.”).