Court Opinion

ID: 9838108
Source: CourtListenerOpinion
Date Created: 2023-09-05 12:07:52.16163+00
Date Added: 2024-06-11T15:34:15.807789
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                   No. COA22-571

                              Filed 05 September 2023

Carteret County, No. 20 CVS 1158

TIFFANY HOWELL; et al., Plaintiffs,

            v.

ROY COOPER, III, in his official capacity as Governor; at al., Defendants.

      Appeal by Defendants from an order entered 16 February 2022 by Judge

Joshua W. Willey, Jr., in Carteret County Superior Court. Heard in the Court of

Appeals 10 January 2023.

      Kitchen Law, PLLC, by S. C. Kitchen, for Plaintiffs-Appellees.

      Attorney General Joshua H. Stein, by Special Deputy Attorneys General
      Matthew Tulchin and Michael T. Wood, for Roy A. Cooper, III, in his official
      capacity as Governor, and the State of North Carolina, Defendants-Appellants.

      No brief filed for Tim Moore, in his official capacity as Speaker of the House of
      Representatives, and Phil Berger, in his official capacity as President Pro
      Tempore of the Senate, Defendants-Appellants.

      WOOD, Judge.

      Governor Roy Cooper (the “Governor”), the State of North Carolina (the

“State”), and Speaker of the House Tim Moore and President Pro Tempore of the

Senate Phil Berger (“Defendants Moore and Berger”), collectively referred to as

“Defendants,” appeal the trial court’s denial of a motion to dismiss a complaint

brought by individuals and incorporated entities owning or operating bars
                                  HOWELL V. COOPER

                                   Opinion of the Court

(“Plaintiffs”). Plaintiffs’ complaint alleged causes of action under N.C. Const. art. 1,

§§ 1, 19, regarding North Carolinians’ right to “the enjoyment of the fruits of their

own labor” and to substantive due process under “the law of the land.” We hold

sovereign immunity does not bar Plaintiffs’ claims and Plaintiffs state colorable

constitutional claims.

                         I. Factual and Procedural History

      After the Governor declared a state of emergency in March 2020 in response to

COVID-19 and issued a series of executive orders initially closing bars and repeatedly

extending the closure, Plaintiffs filed their original complaint on 22 December 2020.

In it, Plaintiffs alleged the executive orders made their businesses “unprofitable to

operate” and caused “financial damages due to the closing of their respective

businesses, or the severe restrictions placed on their respective businesses.”

Plaintiffs put forward five causes of action, alleging the following violations of their

constitutional rights: (1) their right to earn a living (“the enjoyment of the fruits of

their own labor”) under N.C. Const. art. I, § 1 (the “fruits of labor clause”); (2) a

purported as-applied challenge to N.C. Gen. Stat. § 166A-19.31(b)(2) (2020); (3) their

substantive due process rights under N.C. Const. art. I, § 19 (the “law of the land

clause”); (4) their right to equal protection of the laws under N.C. Const. art. I, § 19;

and (5) a facial challenge to N.C. Gen. Stat. § 166A-19.30(c) (2020). Plaintiffs claimed

damages “in excess of $25,000” and requested a permanent injunction preventing any

further impairment on Plaintiffs’ businesses.

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                                  HOWELL V. COOPER

                                   Opinion of the Court

      On 29 January 2021, the Governor and the State filed a motion to dismiss

Plaintiffs’ complaint pursuant to N.C. R. Civ. P. 12(b)(1), 12(b)(2), and 12(b)(6) and

noted any facial challenges to statutes would need to be heard by a three-judge panel

of the superior court pursuant to N.C. Gen. Stat. § 1-267.1(a1) (2022). Accordingly,

on 15 March 2021, the trial court transferred Plaintiffs’ fifth cause of action, a facial

challenge to the operative statute, to a three-judge panel.

      On 11 May 2021, Plaintiffs filed an amended complaint adding Defendants

Moore and Berger. On 12 July 2021, the Governor and the State filed a motion to

dismiss Plaintiffs’ amended complaint pursuant to N.C. R. Civ. P. 12(b)(1), 12(b)(2),

and 12(b)(6). On 19 July 2021, Defendants Moore and Berger answered Plaintiffs’

amended complaint.      On 28 January 2022, the trial court held a hearing on

Defendants’ motion to dismiss.

      On 16 February 2022, the trial court entered an order denying Defendants’

motion to dismiss as to Plaintiffs’ first and third causes of action pursuant to the

fruits of labor clause and law of the land clause of our Constitution. The trial court

transferred the second cause of action, a constitutional challenge to the operative

statute, to a three-judge panel of the superior court as it had done with Plaintiffs’

fifth cause of action. Finally, the trial court dismissed Plaintiff's fourth cause of

action relating to equal protection and determined Plaintiffs’ request for permanent

injunctive relief was moot due to the lifting of restrictions on businesses by the time

the matter had been heard.

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                                 HOWELL V. COOPER

                                  Opinion of the Court

                                  II. Jurisdiction

      N.C. Gen. Stat. § 1-277 allows an appeal from a determination of a superior

court affecting a party’s substantial rights. N.C. Gen. Stat. § 1-277 (2022).

      According to well-established North Carolina law, governmental
      immunity is an immunity from suit rather than a mere defense to
      liability. For that reason, this Court has held that denial of dispositive
      motions such as motions to dismiss that are grounded on governmental
      immunity affect a substantial right and are immediately appealable.

(Doe v. Charlotte-Mecklenburg Bd. of Educ., 222 N.C. App. 359, 363, 731 S.E.2d 245,

248 (2012) (cleaned up). Specifically, the denial of a motion to “dismiss based on the

defense of sovereign immunity pursuant to Rule 12(b)(6) . . . affects a substantial

right and is immediately appealable under” N.C. Gen. Stat. 1-277. Murray v. Univ.

of N.C. at Chapel Hill, 246 N.C. App. 86, 92, 782 S.E.2d 531, 535 (2016). A party

actually must rely on sovereign immunity in its motion to dismiss, and it may do so

in its written motion or orally at the hearing on the motion to dismiss. Id., 246 N.C.

App. at 93, 782 S.E.2d at 536 (“[S]ince neither defendant’s written motion nor its oral

argument at the hearing relied on Rule 12(b)(6) in connection with the sovereign

immunity defense, the case law authorizing interlocutory appeals for a denial of a

Rule 12(b)(6) motion based on sovereign immunity does not apply”).

      Here, Defendants did not mention sovereign immunity in their original motion

to dismiss or in their motion to dismiss Plaintiffs’ amended complaint. However,

Defendants’ counsel raised sovereign immunity in the hearing on the motion to

dismiss:

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                                  HOWELL V. COOPER

                                   Opinion of the Court

      [T]he plaintiffs’ amended complaint fails to state a claim and must be
      dismissed for a couple of reasons . . . . The second reason . . . is that the
      plaintiffs are seeking damages in this case, and we would contend that
      the damages claims are barred by sovereign immunity.

Defendants’ counsel’s reference here indicates Defendants’ motion to dismiss

pursuant to Rule 12(b)(6) is based, at least partially, on a sovereign immunity

defense. Accordingly, at a minimum, the trial court’s denial of Defendants’ Rule

12(b)(6) motion based on sovereign immunity affected Defendants’ substantial rights,

and therefore, their interlocutory appeal is properly before us. Murray, 246 N.C. App.

at 92, 782 S.E.2d at 535.

      We note that a “denial of a Rule 12(b)(1) motion based on sovereign immunity

does not affect a substantial right [and] is therefore not immediately appealable

under” N.C. Gen. Stat. § 1-277. Can Am S., LLC v. State, 234 N.C. App. 119, 122,

759 S.E.2d 304, 307 (2014). Therefore, the trial court’s denial of Defendants’ motion

to dismiss pursuant to Rule 12(b)(1) is not properly before us as an interlocutory

appeal. As for Defendants’ motion to dismiss pursuant to Rule 12(b)(2), “to the extent

[D]efendant[s] relied on Rule 12(b)([2]) in moving to dismiss on sovereign immunity

grounds,” that component of their motion to dismiss would support an immediate

appeal. Murray, 246 N.C. App. at 92–93, 782 S.E.2d at 536.

      Accordingly, Defendants’ interlocutory appeal is proper pursuant to the trial

court’s denial of their Rule 12(b)(6) motion to dismiss.

                                     III. Analysis

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                                   HOWELL V. COOPER

                                    Opinion of the Court

      Defendants argue sovereign immunity bars Plaintiffs’ claims, and Plaintiffs

fail to state colorable constitutional claims. We disagree.

                               A. Sovereign Immunity

      We review “a trial court’s decision to grant or deny a motion to dismiss based

upon the doctrine of sovereign immunity using a de novo standard of review.

Questions of law regarding the applicability of sovereign or governmental immunity

are reviewed de novo.” Lannan v. Bd. of Governors of Univ. of N. Carolina, 285 N.C.

App. 574, 587, 879 S.E.2d 290, 301 (2022) (cleaned up).

      We begin with a review of sovereign immunity:

             As a general rule, the doctrine of governmental, or
             sovereign immunity bars actions against, inter alia, the
             state, its counties, and its public officials sued in their
             official capacity. The doctrine applies when the entity is
             being sued for the performance of a governmental function.
             But it does not apply when the entity is performing a
             ministerial or proprietary function.

Herring ex rel. Marshall v. Winston-Salem/Forsyth Cnty. Bd. of Educ., 137 N.C. App.

680, 683, 529 S.E.2d 458, 461 (2000) (citations omitted). Sovereign immunity, at its

core, immunizes the state when it is “exercising its judicial, discretionary, or

legislative authority . . . or is discharging a duty, imposed solely for the benefit of the

public,” from “liability for the negligence of its officers . . . unless some statute”

provides otherwise. Steelman v. City of New Bern, 279 N.C. 589, 593, 184 S.E.2d 239,

241–42 (1971).

        The doctrine of sovereign immunity is

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                                  HOWELL V. COOPER

                                   Opinion of the Court

             firmly established in the law of our State today and has
             been recognized by the General Assembly as the public
             policy of the State. The doctrine of sovereign immunity has
             been modified, but never abolished. It has been said that
             the present day doctrine seems to rest on a respect for the
             positions of two coequal branches of government—the
             legislature and the judiciary. Thus, courts have deferred
             to the legislature the determination of those instances in
             which the sovereign waives its traditional immunity.

Corum v. Univ. of N. Carolina Through Bd. of Governors, 330 N.C. 761, 785, 413

S.E.2d 276, 291 (1992).

      Still, North Carolina courts have a sacred duty to safeguard the constitutional

rights of her citizens. “[I]t is the judiciary’s responsibility to guard and protect those

rights” enumerated in the Declaration of Rights. Id. At 785, 413 S.E.2d at 291. “The

doctrine of sovereign immunity cannot stand as a barrier to North Carolina citizens

who seek to remedy violations of their rights guaranteed by the Declaration of

Rights.” Id. At 785-86, 413 S.E.2d at 291. And because “rights protected under the

Declaration of Rights from violation by the State are constitutional rights,” whereas

the doctrine of sovereign immunity “is a common law theory or defense established

by” our Supreme Court, “when there is a clash between these constitutional rights

and sovereign immunity, the constitutional rights must prevail.” Id. At 786, 413

S.E.2d at 292.

      In Corum, a landmark sovereign immunity case, our Supreme Court stated:

      When called upon to exercise its inherent constitutional power to
      fashion a common law remedy for a violation of a particular
      constitutional right, . . . the judiciary must recognize two critical

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                                  HOWELL V. COOPER

                                   Opinion of the Court

      limitations. First, it must bow to established claims and remedies where
      these provide an alternative to the extraordinary exercise of its inherent
      constitutional power. Second, in exercising that power, the judiciary
      must minimize the encroachment upon other branches of government --
      in appearance and in fact -- by seeking the least intrusive remedy
      available and necessary to right the wrong.

      330 N.C. at 784, 413 S.E.2d at 291 (emphasis added). Defendants argue

sovereign immunity bars Plaintiffs’ claims because in seeking monetary damages,

Plaintiffs did not seek the least intrusive remedy. Specifically, Defendants argue the

mandate to “seek the least intrusive remedy available” applies at the pleading stage,

and therefore requires a plaintiff to seek injunctive relief before the party may state

a claim for damages.       The Corum court specifically referred to the judiciary’s

responsibilities in formulating a remedy, however, not a party’s obligations at the

pleading stage: “It will be a matter for the trial judge to craft the necessary relief.”

Id. at 784, 413 S.E.2d at 290. Accordingly, Corum requires the judiciary to shape the

remedy, not a plaintiff to seek injunctive relief as a prerequisite to reaching trial.

When a constitutional violation occurs, and no statute provides redress for the

violation, the constitutional provision “is self-executing, and the common law, which

provides a remedy for every wrong, will furnish the appropriate action for the redress

of such grievance.” Sale v. State Highway & Pub. Works Comm'n, 242 N.C. 612, 618,

89S.E.2d 290, 296 (1955). We further conclude that any failure by Plaintiffs to seek

injunctive relief prior to damages does not stand as a bar at the pleading stage to

their claim for damages.

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                                 HOWELL V. COOPER

                                  Opinion of the Court

                        B. Stating a Constitutional Claim

      “When reviewing a motion to dismiss, an appellate court considers whether the

allegations of the complaint, if treated as true, are sufficient to state a claim upon

which relief can be granted under some legal theory.” Deminski on behalf of C.E.D.

v. State Bd. of Educ., 377 N.C. 406, 412, 858 S.E.2d 788, 793–94 (2021).

      Also relevant to whether Plaintiffs can survive Defendants’ immunity defense

is whether Plaintiffs have stated constitutional claims. The doctrine of sovereign

immunity shall not operate to deprive North Carolinians of an opportunity to redress

alleged constitutional violations. Craig ex rel. Craig v. New Hanover Cnty. Bd. of

Educ., 363 N.C. 334, 340, 678 S.E.2d 351, 356 (2009). Our Supreme Court has “carved

out an express exception to sovereign immunity for constitutional injuries.” Town of

Apex v. Rubin, 277 N.C. App. 328, 352, 858 S.E.2d 387, 403 (2021). Specifically, “in

the absence of an adequate state remedy, one whose state constitutional rights have

been abridged has a direct claim against the State under our Constitution.” Corum,

330 N.C. at 782, 413 S.E.2d at 289. Corum specifically held sovereign immunity will

not bar North Carolinians from seeking to remedy alleged violations guaranteed by

the Declaration of Rights of our Constitution. Id. at 783, 413 S.E.2d at 290; see also

Bunch v. Britton, 253 N.C. App. 659, 667, 802 S.E.2d 462, 469 (2017).

      The very first Article of our Constitution reads: “We hold it to be self-evident

that all persons are created equal; that they are endowed by their Creator with

certain inalienable rights; that among these are life, liberty, the enjoyment of the

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                                   HOWELL V. COOPER

                                    Opinion of the Court

fruits of their own labor, and the pursuit of happiness.” N.C. Const. art. I, § 1

(emphasis added). Later, our Declaration of Rights states:

       No person shall be taken, imprisoned, or disseized of his freehold,
       liberties, or privileges, or outlawed, or exiled, or in any manner deprived
       of his life, liberty, or property, but by the law of the land. No person shall
       be denied the equal protection of the laws; nor shall any person be
       subjected to discrimination by the State because of race, color, religion,
       or national origin.

N.C. Const. art. I, § 19.

       A plaintiff’s complaint must sufficiently allege: (1) a state actor violated an

individual’s constitutional rights, (2) the claim is a colorable constitutional claim (“the

claim must present facts sufficient to support an alleged violation of a right protected

by the State Constitution”), and (3) there is no adequate state remedy apart from a

direct claim under the Constitution. Deminski, 377 N.C. at 413–14, 858 S.E.2d at

793–94.

       Here, first, we must determine whether the Complaint sufficiently alleges

violations of Plaintiffs’ constitutional rights. Regarding Plaintiffs’ fruits of labor

claim, their complaint states:

       42. The Plaintiffs are each owners and operators of bars located in the
       State of North Carolina.

       43. By his issuance of various Executive Orders . . . Defendant Cooper
       has ordered that the facilities of the Plaintiffs be closed, or so severely
       restricted as to make the facilities of the Plaintiffs unprofitable to
       operate. . . .

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                                  HOWELL V. COOPER

                                   Opinion of the Court

       45. [The] Executive Orders . . . deprive the Plaintiffs of their inalienable
       right to earn a living as guaranteed by Art. I, sec. 1 and 19, of the North
       Carolina Constitution. . . .

       48. [The] Executive Orders . . . are or were unconstitutional as applied
       to owners and operators of bars as neither the State of North Carolina
       nor the Governor of the State possess the authority to deprive the
       Plaintiffs of their right to earn a living.

       49. Due to the unconstitutional executive orders, the Plaintiffs have
       been damaged in a sum in excess of $25,000.

Regarding Plaintiffs’ substantive due process claim, their complaint states:

       57. Plaintiffs have the fundamental right to earn a living.

       58. Article I, sec. 19 of the North Carolina Constitution guaranties that
       the State does not issue orders that are unreasonable, arbitrary or
       capricious, and the law be substantially related to the valid object
       sought to be obtained. . . .

       60. There is no rational basis for allowing restaurants, private clubs,
       breweries, wineries, and distilleries to reopen indoors while requiring
       the Plaintiffs’ businesses to remain closed or only operating outdoors.
       Nor is there a rational basis for limiting alcohol sales between the hours
       of 9:00 pm and 7:00 am.

       61. [The] Executive Orders . . . thus violate the substantive due process
       rights of the Plaintiffs and are invalid.

We conclude the Complaint sufficiently alleges state violations of Plaintiffs’

constitutional rights because it coherently pleaded the Governor’s orders violated

their constitutional right to earn a living. Deminski, 377 N.C. at 413, 858 S.E.2d at

793.

       Second, we must determine whether the Complaint sufficiently alleges a

colorable constitutional claim pursuant to theories under the fruits of labor and law

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                                  HOWELL V. COOPER

                                   Opinion of the Court

of the land clauses of our Constitution. We begin with determining whether Plaintiffs

state a claim under the fruits of labor clause. We have held the “provision creates a

right to conduct a lawful business or to earn a livelihood that is ‘fundamental’ for

purposes of state constitutional analysis.” Treants Enters., Inc. v. Onslow County, 83

N.C. App. 345, 354, 350 S.E.2d 365, 371 (1986). “[T]he power to regulate a business

or occupation does not necessarily include the power to exclude persons from

engaging in it.   When this field has been reached, the police power is severely

curtailed.” State v. Harris, 216 N.C. 746, 759, 6 S.E.2d 854, 863 (1940) (citations

omitted). The Harris court held licensing requirements applicable to the dry cleaning

industry were unconstitutional under the fruits of labor clause (among other

constitutional provisions) for their “invasion of personal liberty and the freedom to

choose and pursue one of the ordinary harmless callings of life—a right which we

conceive to be guaranteed by the Constitution.” Id. at 751, 753, 765, 6 S.E.2d at 858–

59, 866.

      The thrust of the fruits of labor clause is that the state “may not, under the

guise of protecting the public interest, arbitrarily interfere with private business, or

impose unusual and unnecessary restrictions upon lawful occupations.” Cheek v.

Charlotte, 273 N.C. 293, 296, 160 S.E.2d 18, 21 (1968) (licensing requirements

unconstitutionally targeted massage parlors). Although this State’s courts often have

analyzed the fruits of labor clause in the context of legislative licensing requirements,

that context is not its only application. See King v. Town of Chapel Hill, 367 N.C.

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                                  HOWELL V. COOPER

                                   Opinion of the Court

400, 408–09, 758 S.E.2d 364, 371 (2014) (town council’s fee schedule for vehicle towing

services “implicates the fundamental right to earn a livelihood” under the fruits of

labor clause) (quotation marks omitted); see also Tully v. City of Wilmington, 370 N.C.

527, 535–36, 810 S.E.2d 208, 215 (2018) (“Article I, Section 1 also applies when a

governmental entity acts in an arbitrary and capricious manner toward one of its

employees”).

      Here, Plaintiffs have a fundamental right to earn a living from the operation

of their respective bar businesses. The constitutional right to produce a living from

the income of one’s business is a protected right under the fruits of labor clause.

Where, as here, the complaint alleges that the blanket prohibition—rather than

regulation—of an entire economic sector violates one’s right to earn a living, that

complaint states a colorable constitutional claim. Deminski, 377 N.C. at 413, 858

S.E.2d at 793.

      Next, we turn to whether Plaintiffs state a claim under the law of the land

clause. Our Supreme Court has held that the “law of the land” clause is North

Carolina’s version of the federal substantive due process clause. McNeill v. Harnett

Cnty., 327 N.C. 552, 563, 398 S.E.2d 475, 481 (1990); see also Rhyne v. K-Mart Corp.,

358 N.C. 160, 180, 594 S.E.2d 1, 15 (2004). Therefore, that clause protects those

“fundamental rights and liberties which are, objectively, deeply rooted in [this

State’s] history and tradition and implicit in the concept of ordered liberty.” State v.

Dobbins, 277 N.C. 484, 497, 178 S.E.2d 449, 457, (1971); Matter of Bethea, 255 N.C.

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                                    Opinion of the Court

App. 749, 754, 806 S.E.2d 677, 680–81 (2017). Our Supreme Court has described the

right to enjoy the fruits of one’s own labors as the inalienable right to earn a living as

long as the business is not “within the category of social and economic ills.” State v.

Harris, 216 N.C. 746, 759, 6 S.E.2d at 854, 863 (1940). “The right to conduct a lawful

business or to earn a living is regarded as fundamental.” Roller v. Allen, 245 N.C.

516, 518–19, 96 S.E.2d 851, 854 (1957).

      Here, Plaintiffs have a fundamental right to earn a living from the operation

of their respective bar businesses. Accordingly, we conclude Plaintiffs’ allegations

that the executive orders violated their right to earn a living sufficiently pleaded a

constitutional claim under the law of the land clause. Deminski, 377 N.C. at 413, 858

S.E.2d at 793–94.

      Finally, Plaintiffs pleaded they do not have an adequate state remedy: “The

Emergency Management Act under which the Defendants are operating does not

provide for a plain, speedy, or adequate remedy at law. The [Plaintiffs] therefore do

not have an adequate state remedy.” We agree there is no other adequate state

remedy now that any claim for injunction is moot as the executive orders are no longer

in effect. Accordingly, we conclude Plaintiffs adequately pleaded lack of an adequate

state remedy. Deminski, 377 N.C. at 413, 858 S.E.2d at 793–94.

      In conclusion, we hold the trial court did not err in denying the Motion to

Dismiss as to Plaintiffs’ first and third causes of action for failure to state a claim

upon which relief can be granted.

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                                  HOWELL V. COOPER

                                   Opinion of the Court

      We do not address the validity of the Governor’s actions under the Emergency

Management Act, as the constitutionality of those statutes has yet to be determined.

Two of Plaintiff’s causes of action challenge the constitutionality of the statutes under

which the Governor purported to act.           The trial court transferred Plaintiffs’

constitutional challenges to N.C. Gen. Stat. § 166A-19.30(c) and N.C. Gen. Stat. §

166A-19.31(b)(2) to a three-judge panel as required. Defendants did not appeal the

trial court’s transfer of Plaintiffs’ second and fifth causes of action, thus, those

matters remain pending before the three-judge panel. Therefore, we do not reach a

determination of the validity of the Governor’s actions under those statutes.

                                   IV. Conclusion

      We are tasked with determining whether sovereign immunity bars Plaintiff’s

claims at the pleading stage and whether Plaintiffs allege colorable constitutional

claims. We do not address the validity of the statutes being contested nor decide the

merits of Plaintiffs’ claims as those issues are not before us. To that end, we hold any

alleged failure on the part of Plaintiffs to seek injunctive relief prior to damages does

not bar their claims at the pleading stage under the theory of sovereign immunity.

We further hold Plaintiffs have stated colorable constitutional claims where they

allege a blanket prohibition against conducting their bar businesses violated both

their right to earn a living and their substantive due process rights under N.C. Const.

art. 1, §§ 1, 19. We affirm the trial court’s denial of Defendants’ Motion to Dismiss.

      AFFIRMED.

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                          Opinion of the Court

Judge Gore concurs.

Judge Arrowood dissents by separate opinion.

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