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Three federal appellate judges heard arguments in late January in a hugely consequential, politically charged lawsuit over North Carolina’s refusal to cover gender-affirming care for state employees and their dependents. 

But those judges won’t decide the case—at least not alone. 

Last week, the Fourth Circuit Court of Appeals announced that all 18 of its judges will rehear Kadel et. al v. Folwell. It was an unusual move. Appeals courts often rehear cases en banc after three-judge panels issue rulings, but they rarely preempt them. 

The court said it will also rehear a similar case from West Virginia en banc, which suggests a motive: It wants to avoid different sets of judges writing opposing decisions on the same question

What that means for Kadel isn’t clear. During the January oral arguments, one of the three judges appeared sympathetic to the plaintiffs, another to the State Health Plan, while the third—whom President Barack Obama nominated—said little. The Fourth Circuit has slightly more Democratic nominees than Republican ones, though some of the judges have been nominated by presidents from both parties over their careers. 

In recent years, the Fourth Circuit has ruled that the federal Americans with Disabilities and Rehabilitation acts cover gender dysphoria, and that schools can’t prohibit transgender students from using bathrooms that conform with their gender identity, both landmark decisions.  

For now, the ruling U.S. District Judge Loretta Biggs issued in June 2022 stands. Biggs said that refusing to cover gender-affirming treatments violates the Equal Protection Clause and Civil Rights Act. 

In appealing that decision, State Treasurer Dale Folwell—now running for governor in an atmosphere in which Republicans are targeting transgender rights—and other State Health Plan administrators argued that the plan did not discriminate by denying coverage for treatments like chest reconstruction surgery, vaginoplasty, and hormone therapy, because it did so for both cisgender and transgender individuals.

(Attorney General Josh Stein, a Democrat also running for governor, refused to defend the State Health Plan in court.) 

The State Health Plan’s brief also said its motives for not covering those treatments are purely financial. Costs are increasing faster than revenues, so “the plan declines requests to expand covered benefits unless the changes benefit the overall health of the plan’s population.” 

“This case has always been about protecting the authority of the [plan’s trustees] to sustain the plan for current, future, and retired members and nothing else,” Folwell said in a press release after Biggs’ ruling.

The plan briefly covered such treatments in 2017, following a federal rule change, but a federal court blocked the rule the following year. Those treatments accounted for about $400,000 of the $3.2 billion the State Health Plan spent on members’ benefits that year. 

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Police in riot gear deploy tear gas and pepper spray against protesters inside the Wake County Public Safety Center parking deck on May 30, 2020. (Travis Long/The News & Observer via AP)

Cross Examination

The ACLU of North Carolina filed a federal lawsuit last week about a new bill that increases criminal and civil penalties for “rioting or inciting rioting that causes damage to property, serious bodily injury, or death.” 

The bill, which amends the existing Anti-Riot Act, passed through the Republican-controlled General Assembly and became law without Gov. Roy Cooper’s signature on March 21; it goes into effect at the end of the year. 

The ACLU says the law violates the First Amendment and seeks to stifle peaceful protests. The complaint further alleges that the law is conservative backlash against massive protests over the deaths of three Black people—the February 23, 2020, fatal shooting of Ahmaud Arbery by three white men while jogging; the police killing of Breonna Taylor on March 13, 2020, while executing a search warrant based on faulty evidence; and the May 25, 2020, murder of George Floyd, who was killed when a white police officer kneeled on his neck. 

Republicans attempted to pass a similar law in 2021, but Cooper vetoed it. 

The Assembly talked to Sam Davis, attorney for the ACLU of NC Legal Foundation, about the lawsuit and the group’s concerns. 

This interview has been edited for length and clarity.

The Assembly: Explain your main concerns about the law. 

Davis: The law is intended to dissuade people from exercising their First Amendment rights. The idea that all the law does is target rioting is really belied by the fact that it was enacted in the midst of the George Floyd protests, the Black Lives Matter Movement protests. The law is over broad; it’s vaguely worded. It’s designed in a way that will give police officers significant discretion, which could lead to discriminator or selective enforcement against people engaged in purely peaceful protests.

The Assembly: You emphasize in the lawsuit that urging someone else to participate in a protest could be criminalized under this bill. Why is that concerning? 

Davis: The main issue with these provisions is that they’re pretty clearly unconstitutional. There was a case in the Fourth Circuit (U.S. Court of Appeals) where the court addressed a very similar provision of the federal Anti-Riot Act, which was passed initially enacted at about the same time as the North Carolina statute. That federal provision said it’s unlawful to encourage a riot and it defined encouraging a riot as urging. 

What the court said in that case is that under the First Amendment, it is permissible for a state to criminalize speech that incites a riot, which means that there is imminent unlawful violence. But the First Amendment permits people to engage in mere advocacy of unlawful conduct. Whether or not you personally agree with all of those kinds of statements, that kind of symbolic speech, that kind of controversial speech, that is often part of lawful demonstrations. 

The urging provisions, we think, are just plainly unconstitutional under Fourth Circuit precedent. Multiple advocates and legislators raised this issue while the General Assembly was debating HB 40, and the legislature did nothing. That suggests to us that they’re interested in trying to dissuade people from exercising their protest rights by adhering to laws that just violate the First Amendment. 

The Assembly: What’s the historical context of North Carolina’s Anti-Riot Act, established in the late 1960s, that’s helpful to know here?

Davis: I don’t think it’s an accident that you see legislators reach for these kinds of laws during times when there are broad, widespread protest movements. So the fact that both the federal Anti-Riot Act (and the N.C. Anti-Riot Act) were passed during the Civil Rights Movement in the late 1960s, I don’t think it’s n accident that in the midst of the Black Lives Matter Movement in the summer of 2020, with protesters coming out to oppose racial injustice, that legislators across the country turned back to these riot statutes or tried to enact new riot statutes under the guise of cracking down.

It’s a way to delegitimize social movements. It’s a way to evade responsibility for answering the demands of protesters. It’s a way to kind of undermine popular support for protest movements by trying to recast them as something criminal, something violent and dangerous. We know from the data that the vast majority of people who engaged in protest in the summer of 2020 and subsequently were peaceful protesters who came out to show solidarity with their community.

We know that a lot of the incidents of violence that these legislators point to were actually perpetrated by outside agitators, including by white supremacist groups and others who are expressly opposed to the demands of racial justice protesters. It’s not an accident that this is a reflex legislators turn to when they don’t actually want to address the demands of communities that have been oppressed for hundreds of years. 

On Our Radar

State v. Goolsby

Wake County District Court Judge Rashad Hauter was scheduled to formally dismiss a misdemeanor assault charge against Terayah Goolsby this week, after previously ruling that the state had violated her constitutional rights.

That in itself isn’t noteworthy; judges toss cases every day. But this dismissal became the talk of the Wake County Justice Center when Hauter issued his preliminary decision last month.   

Court records show that Raleigh police arrested Goolsby on January 23, for allegedly assaulting her ex-girlfriend’s current partner. The arresting officer told the magistrate that Goolsby had committed an act of domestic violence, which triggered a mandatory hold on bail for up to 48 hours. 

Under state law, magistrates can’t decide whether to release people charged with domestic violence. Those defendants are jailed until a judge is available, usually the next weekday morning. Goolsby spent that Monday night behind bars and was released the next morning on a $2,000 bond. 

But assaulting your ex’s new partner isn’t domestic violence, which means the hold shouldn’t have applied. Goolsby’s attorney filed a motion to dismiss just before her March 21 trial. 

In response, Assistant District Attorney Lupe Howell “argued that ‘this happens all the time, it happens every week,’ in reference to criminal cases being incorrectly designated as crimes of domestic violence,” Judge Hauter recounted in his preliminary dismissal. “ADA Howell further argued that if the court granted the defense’s motion to dismiss, that it would set a precedent for many other cases” incorrectly flagged as domestic violence. 

Hauter added: “Notably, ADA Howell did not indicate to the court if the state has taken any corrective measures to address these violations of defendants’ rights despite the fact that the state is aware that these violations are happening ‘all the time.’”

Chris Floyd, Goolsby’s attorney, did not respond to requests for an interview. 

It’s difficult to determine how often Wake County magistrates improperly employ domestic violence holds. A few defense attorneys described it as common, while a veteran former public defender said she’d only seen it a handful of times. 

Wake County District Attorney Lorrin Freeman told The Assembly in an email that the consensus among domestic violence prosecutors was “that we have not seen this issue come up in any routine way, but we will remain vigilant about it.” 

Amily McCool, a former Wake prosecutor who handled domestic violence cases, suggested that Howell might have used hyperbole to support a flawed argument: Hauter didn’t create a precedent by dismissing charges over misuse of the domestic violence hold. The N.C. Supreme Court did that 25 years ago

Duke University and Allergan Inc. v. Sandoz Inc.

Earlier this month, a Colorado jury ordered the drug company Sandoz to pay Duke University and its pharma partner, Allergan, $39 million over a patent dispute. 

The result, first reported by the Triangle Business Journal (subscription required), caps Duke and Allergan’s decade-long quest to block generic drug companies from producing a cheaper version of the eyelash-growing serum Latisse. Duke owns the patent and licenses it to Allergan. 

Duke and Allergan filed their first Latisse lawsuits against Sandoz and Apotex, another generic drugmaker, in 2011. U.S. District Court Judge Catherine C. Eagles, of the Middle District of North Carolina, rejected Sandoz’s claim that Duke’s patent was “invalid as obvious”—meaning anyone with “ordinary skill in the subject” could have developed the same thing independently. An appeals court overturned her decision in 2014.  

Allergan filed a second lawsuit alleging that the same generics violated new patents it had obtained. Eagles rejected Allergan’s claim. Duke and Allergen filed a third lawsuit, also in Eagles’ courtroom, and lost once again. 

For their fourth lawsuit, in 2018, Duke and Allergan tried something different. They first narrowed the scope of the original patent, then filed their complaint in Texas, where one of  Sandoz’s manufacturers is located. Sandoz tried to get the case sent back to North Carolina. Instead, the lawsuit moved to Colorado, where Sandoz is headquartered, and went to trial. 

Duke and Allergan’s persistence seems to have paid off with this verdict. The final patent for Latisse appears to expire at the end of 2024, though generic versions of the serum are already available.  

Let us know what you think courts@theassemblync.com.

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