The Pulse

BREAKING: NC Supreme Court issues much anticipated rulings on education funding, environmental protection

By: - November 4, 2022 1:07 pm

[These are developing stories. Policy Watch will be posting regular updates.]

After nearly three decades of litigation, Leandro case finally comes to a head as justices order lawmakers to fund court-approved education improvement plan

By Greg Childress

In a dramatic ruling issued just days before midterm elections, the North Carolina Supreme Court upheld a lower court’s ruling and ordered the transfer of millions of dollars to pay for a school improvement plan designed to provide the state’s school children with the sound basic education guaranteed under the state constitution

The court’s Democratic majority agreed to send the case back to the trial court to recalculate how much money should be transferred from state coffers to pay for the second and third years of what is commonly known as the comprehensive remedial plan.

“Once those calculations have been made, we instruct the trial court to order those State officials to transfer those funds to the specified State agencies,” Supreme Court Justice Robin E. Hudson wrote in the majority opinion.

The eight-year comprehensive remedial plan calls for more than $5.6 billion in public education spending by 2028. Spending on the second and third years of the plan was $1.75 billion before lawmakers approved the recent state budget that partially funded the plan.

State budget officials have estimated that nearly $800 million in the comprehensive plan is unfunded for year two and three.

Superior Court Judge David Lee ordered the state to transfer the $1.75 million last November to fund two years of the school improvement plan developed by education consultant WestEd. However, a state Court of Appeals panel ruled that Lee didn’t have the authority to require the state to spend the money on the plan.

Superior Court Judge Michael Robinson replace lee as the trial judge in March. Robinson ruled that the state must spend $785 million to fully fund the first two years of the comprehensive remedial plan. But Robinson said state officials should not be forced to hand over the money for the plan.

Gov. Roy Cooper said in a statement that the state has a constitutional duty to ensure every child has access to a sound basic education.

“As the NC Supreme Court has affirmed today, we must do more for our students all across North Carolina,” Cooper said.

House Democratic Leader Robert Reives also applauded the ruling.

“For years, our state has not lived up to the constitutional requirement to fund a sound, basic education for our children. The Court found that after decades of inaction, now is the time for North Carolina to uphold our obligation to provide that education. It is unfortunate that the Courts have had to compel the Legislature to do what we should have done a long time ago.”

The state Supreme Court is made up of four Democrats and three Republicans. The political makeup of the Court could change after the Nov. 8 election. The Court’s 4-3 decision was made along party lines with Democrats in the majority and Republicans dissenting.

N.C. Justice Center Director Rick Glazier called the ruling the most important civil rights decision issued by the state Supreme Court in decades. Glazier said the decision will benefit generations of school children.

“Finally, after decades of prolonged litigation, the fundamental constitutional right of the children of North Carolina to receive a sound basic education and the vital resources necessary to give that right meaning is given life, enshrined and ensured,” Glazier said.

[Note: Policy Watch is a project of the Justice Center.]

The state’s Republican leadership has long held that the court does not have the authority to order the legislature to pay for the comprehensive plan.

“The people of North Carolina through their elected legislators, not an unelected county-level trial judge, decide how to spend tax dollars,” Senate leader Phil Berger said last December. “Rather than accepting responsibility for lagging achievement and outright failure, the Leandro parties insist that the pathway to student improvement is always the simple application of more money.”

In the dissenting opinion, Justice Phil Berger Jr., the Senate leader’s son, called the decision an “astonishing step” that “permits the judiciary to ordain itself as super-legislators.”

This action is contrary to our system of government, destructive of separation of powers, and the very definition of tyranny as understood by our Founding Fathers,” Berger wrote.

Berger was joined by Chief Justice Paul Newby and Justice Tamara Barringer in the dissenting opinion.

The Leandro case began nearly three decades ago when school districts in five low-wealth counties sued the state, claiming that children were not receiving the same level of educational opportunities as students in wealthier counties. School districts in Cumberland, Hoke, Robeson, and Vance counties joined Halifax County in the lawsuit.

In 1997, the state Supreme Court issued a ruling, later reconfirmed in 2004, in which it held that every child has a right to a “sound basic education” that includes competent and well-trained teachers and principals and equitable access to resources.

Click here to read the ruling and the dissent.


(Chart: Court records)

Justices rule chemical giants cannot escape liability for PFAS pollution in southeastern NC

By Lisa Sorg

The North Carolina Supreme Court has upheld a lower court’s finding that “New DuPont” and Corteva are liable for potential legal damages in North Carolina related to PFAS contamination, according to a ruling published today.

The state’s highest court also agreed with a Business Court that evidence shows the original parent company, Old DuPont, spun off the two companies, along with Chemours, a complex corporate reorganization done to dodge liability “and to defraud its creditors.”

Ryan Park, a lawyer with the NC Attorney General’s office, had argued the state’s case, asking the Supreme Court to affirm the previous ruling.

Old DuPont operated its Fayetteville Works plants for decades, knowingly discharging and emitting toxic PFAS – perfluorinated compounds – including GenX, into the drinking water and the air.

As Policy Watch previously reported, the historical DuPont corporation — known in court records as “Old DuPont” — has parked roughly $20 billion in two “paper companies” — New DuPont and Corteva, which have no employees, offices or equipment,  to shield those assets from legal liability. The new companies are headquartered in Delaware.

The state of North Carolina has already sued Chemours and Old DuPont, demanding that they pay “all past and future costs to assess, remediate, restore and remedy environmental harms” as a result of operations at the Fayetteville Works plant.

If the assets of Corteva and New DuPont can be tapped into, the payouts could be larger.

(Chart: Court records)

New DuPont and Corteva had argued that they shouldn’t be held responsible for Old DuPont’s actions in North Carolina because they are not the result of a corporate merger.

The Supreme Court disagreed. While the Due Process Clause protects companies from the threat of litigation in “arbitrary jurisdictions, it is not a tool to be weaponized … by enabling defendants to evade accountability …”

In other words, if companies responsible for damages could merely re-organize in a different state – and forgo a merger — they could effectively shield themselves from legal consequences.

The Business Court previously found that both Corteva and New DuPont expressly assumed Old DuPont’s PFAS-related liabilities in an April 2019 Separation Agreement and the June 2019 Letter Agreement.

Nonetheless, lawyers for the Corteva and New DuPont claimed – incredulously – that they had no idea they could face lawsuits in North Carolina. The Supreme Court did not buy their argument.

“When companies undergo complicated transactions like that between Old DuPont, Corteva and New DuPont, they conduct extensive due diligence,” the justices wrote, “and the new parties either are aware of, or should be aware of, the liabilities they might acquire.”

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