North Carolina Court of Appeals allows Employment Law Action to proceed against State University despite Sovereign Immunity argument

The North Carolina Court of Appeals recently allowed an employment law action to proceed against a North Carolina university.  The case, Martinez v. The University of North Carolina, recognizes the right of individuals to sue the State in cases arising from breach of employment contract.

The plaintiff was a former provost of Winston-Salem State University who was asked by the school’s chancellor to resign his provost position and accept a full-time faculty position.   The plaintiff agreed to the request, and the parties entered a written contract to confirm the terms of the transition.  Under the contract, the plaintiff would continue to receive a full administrative salary of $180,000.00 until June 30, 2009.  He would then “retreat” to the Faculty of the School of Education where he would receive a salary commensurate with salaries of other senior faculty members.

As the transition date approached, WSSU notified the plaintiff that his annual faculty salary would be $85,000.00.  The plaintiff, feeling that this salary was not commensurate with salaries of similarly situated faculty members, initiated a grievance.  A faculty grievance committee determined that the salary was appropriate.  The plaintiff then appealed, in turn, to the new provost and to the chancellor of WSSU, both of whom affirmed the decision.

The plaintiff then filed suit for breach of contract.  WSSU moved to dismiss the suit on grounds that sovereign immunity prevented the suit.  The trial court granted the motion and dismissed the case.   In a decision issued last week, the North Carolina Court of Appeals reversed this ruling, allowing the case to proceed.  The ruling is a significant precedent inasmuch as it permits plaintiffs to circumvent a powerful governmental defense in North Carolina employment law cases based on breach of contract.

Sovereign immunity is a doctrine that generally prevents the State of North Carolina from being sued unless it has consented to the suit.  In considering the trial court’s dismissal on this basis, the Court of Appeals applied an exception to the doctrine.  The exception holds that when the State, through authorized officers and agencies, enters into a valid contract, it implicitly consents to being sued for damages in the event of a breach.  In such circumstances, the state occupies the same position as any other litigant. 

Because WSSU, as an agency of the State, entered into an employment contract with the plaintiff, the Court of Appeals determined that it waived sovereign immunity in the plaintiff’s action for breach of that contract.  Sovereign immunity is often a difficult defense to overcome in suits brought against the government.  The Martinez precedent provides a significant limitation to this defense in North Carolina employment law matters.