The COVID-19 pandemic has devastated North Carolina businesses. The mandatory closings from March into May, restricted hours, limited occupancy in buildings – these crippled small businesses and led to major loss of revenue and eventual closes. In the Triangle alone, over 100 restaurants permanently closed their doors, citing an inability to meet costs with their opportunities to pull in revenue so limited. Many business owners feel entitled to compensation from the state because, without these legal directives, their business would still be open, but is there a case for suing the state for lost revenue during a pandemic? We’re taking a close look at how business owners’ rights, public health matters, and government reach overlap and diverge to determine if you should sue the state of North Carolina to recoup your losses following COVID-19 shutdowns and directives.
A Timeline of Lockdowns and Limitations
First, let’s consider the executive orders that directed the lockdowns and what they actually entail:
- Executive Order 116 (March 10, 2020): Declares the original state of emergency to begin coordinating a response.
- Executive Order 118 (March 17, 2020): Closes restaurants and bars for dine-in service.
- Executive Order 120 (March 23, 2020): Limiting gatherings to 50 people or less, closing businesses, including theaters, bowling alleys, gyms, beauty salons and barbers, tattoo parlors, and massage parlors.
- Executive Order 127 (March 27, 2020): Stay at Home Order from March 30 through April 29, closing all but essential businesses and directing people to stay home and banning all gatherings of more than 10 people.
- Executive Order 135 (April 23, 2020): Extending Stay at Home Order to May 8, 2020.
- Executive Order 141 (May 20, 2020): Safer at Home recommendation limits business hours, capacity, and requires masks of building occupants.
- Executive Order 153 (July 28, 2020): Restricts serving alcohol after a certain point.
- Executive Order 181 (December 8, 2020): Implements a modified stay-at-home order (curfew) and requires certain businesses to close between 10 p.m. and 5 a.m.
These executive orders directly impacted North Carolina businesses’ ability to maximize their revenue and caused many businesses to close down.
The Foundation of Lawsuits Against Lockdowns
There are currently several settled and pending cases against the state of North Carolina. At the crux of many of them is the 5th Amendment of the U.S. Constitution which states “Nor shall private property be taken for public use, without just compensation.” Now, this is the platform of eminent domain law, but it can be interpreted that closing down businesses is akin to private property being taken for public use, and because businesses haven’t been justly compensated, they may be able to sue the state. Additionally, the 14th Amendment, which guarantees that states cannot take away the “privileges or immunities” of citizens has also been invoked in these cases.
On the other hand, in matters of public health, courts tend to side with restrictions and law, beginning with Jacobson v. Massachusetts, a 1905 ruling related to mandatory vaccinations. The Supreme Court ruled that unlimited freedom is not a guarantee under the constitution, but any health-related restrictions must be backed by science.
In addition to federal law, there are some concerns over the legality of lockdowns and forced business closures in North Carolina law, specifically, the Emergency Management Act – General Statute 166A 19.10 and 19.30. These specifically address the Powers of the Governor, and provide him or her with the ability to utilize state resources, direct evacuations, and establish economic controls over resources and services during a state of emergency.
However, the question is whether these lockdowns were necessary in the face of the pandemic and how they benefitted public good.
Existing Lockdown Lawsuits Against the State of North Carolina
There have been several lawsuits already brought against state and local governments. Notably, Forest V. Cooper, in which Lt. Governor Forest challenged the governor’s orders prohibiting restaurants from operating beyond take-out and requiring citizens to stay home. Forest alleged that Cooper failed to gain the agreement of other state officials prior to enacting the emergency management act and that the statewide quarantine and isolation authority was put into place without any type of procedure or plan. Forest dropped the case against Cooper.
In the case of North Carolina Bowling Proprietors Association, Inc. v. Cooper, the Association challenged the governor’s orders to remain closed, alleging that the order deprives people of the right to earn a living which is guaranteed by the North Carolina Constitution. The Superior Court determined that their case has a probability of success s they met their burden of showing no evidence0based reasoning that bowling was prohibited if proper operational guidelines were followed, and that being closed for over 100 days demonstrated irreparable harm.
Can You Sue the State for Revenue Lost During Stay at Home Orders?
Whether or not you have a case against the state is dependent on several factors, and there are precedents on both sides. Having an attorney who can look at your unique case and situation as well as apply the appropriate statutes and amendments is key to determining whether you have a case and if you have a chance of winning against the governor.
Schedule a Consultation with Our Business Law Attorneys in Raleigh Today
If your business has experienced irreparable harm due to mandatory closure and limited hours and operations, you may be due some type of compensation. To learn about your options and take the next step, reach out to our law firm in Raleigh today at 919-615-2473 or fill out the form below to get started.
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