Unanimous Appeals Court rules state can’t sue former Kinston charter school over false enrollment claim

A unanimous three-judge panel of the N.C. Court of Appeals has agreed that the state cannot sue a former Kinston charter school over false enrollment claims. The state still can pursue its suit against the school’s former CEO.

At issue was the estimate that the former Kinston Charter Academy would enroll 366 students in 2013-14. That figure fell within the guidelines established by state law, but the school year opened with just 189 students in attendance. The school surrendered its charter in September 2013, but the state was unable to recover extra money awarded to the school based on  the overly inflated enrollment numbers.

The state, led by then-Attorney General Roy Cooper, filed suit in 2016. It alleged violations of the N.C. False Claims Act. While the case can proceed against former school CEO Ozie Hall, the school itself cannot be sued, according to the unanimous Appeals Court panel.

Writing for the court, Judge Phil Berger Jr. finds:

Because Kinston Charter, as a public school, was engaged in a constitutionally mandated function reserved to the State, we conclude Kinston Charter is entitled to the State’s sovereign immunity. Moreover, the State has failed to carry its burden of showing that the General Assembly intended to waive Kinston Charter’s immunity so as to include it within the term “person” for purposes of the [False Claims] Act. Accordingly, the trial court erred in denying Kinston Charter’s 12(b)(6) motion, and we reverse.

Even assuming, arguendo, that charter schools are not categorically entitled to claim sovereign immunity from the NCFCA, Kinston Charter would still not be subject to suit under an arm-of-the-state analysis applicable to entities performing State functions.

Mitch Kokai / Senior Political Analyst

Mitch Kokai is senior political analyst for the John Locke Foundation. He joined JLF in December 2005 as director of communications. That followed more than four years as chie...

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