5 of 7 NC Justices’ Family Members are in the Class: Will they hear the appeal?

There are 7 justices on the North Carolina Supreme Court, and 4 are required to constitute a quorum. But what if 5 of the 7 justices have a family history of public service that could prevent them from hearing an appeal?

In Lake v. State Health Plan for Teachers & State Employees, 852 S.E.2d 888 (N.C. 2021), a class of over 220,000 members (or their estates) of the North Carolina Teachers’ and State Employees’ Retirement System spanning over two decades challenged a law requiring them to pay a premium to obtain health insurance coverage. The retirees prevailed at the trial court level, winning partial summary judgment declaring the State breached its contract with the retirees by failing to provide premium-free coverage and failing to reimburse the retirees for premiums they paid. But a unanimous panel of the Court of Appeals reversed that order, and the North Carolina Supreme Court granted the retirees’ petition for discretionary review. 

In a special order issued January 26, 2021, 5 of the 7 justices disclosed that they had family members by blood or marriage who either are or could be class members. Specifically:

  1. Chief Justice Newby’s mother is a retired teacher.
  2. Justice Ervin’s grandfather was a retired North Carolina Supreme Court justice, his father was a retired superior court judge, his mother is a retired teacher, and his brother-in-law is a retired special agent.
  3. Justice Morgan’s grandmother was a retired teacher.
  4. Justice Berger’s mother-in-law is a retired teacher and his wife’s grandmother was a retired school teacher.
  5. Justice Barringer’s mother is a retired public school lunchroom cashier and her aunt is a retired teacher’s assistant and bus driver.

Canon 3C(1)(d)(i) of the North Carolina Code of Judicial Conduct states a judge should disqualify herself in a case if “the judge’s impartiality could reasonably be questioned,” including a case in which “[t]he judge or the judge’s spouse, or a person within the third degree of relationship to either of them, or the spouse of such a person,” “[i]s a party to the proceeding . . . .” Given this broad definition – which extends to a third degree family member by blood or marriage – and the size of the putative class, it is no surprise these conflicts loom.

But if all 5 justices are disqualified under Canon 3C(1)(d)(i), then the Court would not have a quorum to hear the appeal because only 2 justices would be left. In this unusual circumstance, the Court is left with two main options:

  1. See if the parties agree that the disclosure is immaterial or insubstantial, and permit the justices to continue to hear the case. The parties’ agreement should be “signed by all lawyers” and “incorporated in the record of the proceeding.”
  2. Invoke the “Rule of Necessity” which states “actual disqualification of a member of a court of last resort will not excuse such member from performing his official duty if failure to do so would result in a denial of a litigant’s constitutional right to have a question properly presented to such a court.” Boyce & Isley, PLLC v. Cooper, 357 N.C. 655, 588 S.E.2d 887, 888 (2003).

The Court asked the parties to provide written objections to the justices’ participation by February 1, 2020.  The retirees consented to all the justices participating. But the Retirement Plan objected and argued it would be inappropriate for the Court to invoke the Rule of Necessity because the case is before the North Carolina Supreme Court on discretionary review from a “unanimous and thorough opinion” from the Court of Appeals.

On February 8, 2020, the Court ordered the parties to submit “any additional comments” on whether “the Court should, in the exercise of its discretion, invoke the rule of necessity in order to reach the merits of this case.”

Again, the Retirement Plan objected, arguing most cases never reach the North Carolina Supreme Court, the merits were briefed and argued before the Court of Appeals, and there is no precedent for invoking the Rule of Necessity to overcome the lack of quorum. On the other hand, the retirees argued invoking the Rule of Necessity is appropriate because the North Carolina Supreme Court has authority and discretion over the judicial canons and “potential conflicts of interest should be subordinate to the Court’s duty to render a decision on the merits of an appeal.” It also argued the Retirement Plan already agreed to the North Carolina Supreme Court hearing the appeal when it filed a petition to bypass the Court of Appeals, it consented to waiving conflicts issues at the Court of Appeals level, and this case is too important to ignore – it impacts nearly 5% of North Carolina’s population.

The Court’s decision here will be interesting. Yes, the case has significant scope and importance – the Retirement Plan, in earlier filings, seems to acknowledged as much.  But the retirees have no right to an appeal here, and the prospect of a majority of the Supreme Court exercising its discretion to decide issues in which family members are interested has its own set of public policy implications. We’re not privy of course to the deliberations of the Court as it weighs these issues, but it would not surprise us if they repeated the consternation of the United States Supreme Court some 100 years ago in another “Rule of Necesity” case:  “Because of the individual relation of the members of this court to the question . . . we cannot but regret that its solution falls to us.” Evans v. Gore, 253 U.S. 245, 253 (1920).