Judge dismisses lawsuit challenging $10 million aid to Johnson & Wales

A Wake County Superior Court judge Tuesday dismissed a lawsuit by a conservative legal group to halt $10 million in state subsidies for Johnson & Wales University in Charlotte.

The decision marked another installment in the controversy that has lingered since legislative leaders cut a deal to start parceling out money to the culinary school in 2003.

It was the second loss in the same day for the N.C. Institute for Constitutional Law and its efforts to reshape state law governing multi-million dollar incentives used to lure businesses to the state. While the institute's director, former Supreme Court Justice Bob Orr, was arguing the Johnson & Wales case, he was literally handed defeat in another. A colleague passed him a copy of a state Court of Appeals ruling that the institute's suit over $250 million in tax breaks and other perks for Google could not proceed.

In the Johnson & Wales case, the judge ruled that the subsidies served a legitimate public purpose for education and economic development and that the Charlotte and Lincolnton residents represented by the institute did not have a basis to sue.

"If an act will promote the welfare of the state and its citizens," Superior Court Judge Michael Morgan read from the bench, "it is a public purpose."

The institute's lawyers claimed that giving money to the culinary school is unconstitutional, nothing more than a political promise made by then-House Speaker Jim Black and bankrolled by taxpayers.

Since 2003, $6.5 million of the pledged funds have been given in installments. The institute lawyers wanted the state to force a refund and halt future payments. Unlike other economic incentives, the Johnson & Wales money was a gift to a single organization with no requirements for producing jobs or other measurable gains for the state, said Jeanette Doran, a staff lawyer with the institute, during arguments.

Morgan, though, agreed with lawyers for the state and the school. They had countered with previous court cases concluding that the legislature appropriates money for public purposes, and education is a public purpose that, among other benefits, helps North Carolinians get jobs.

"The overall goal is to benefit the public," said Normal Harrell of the N.C. Attorney General's office.

Morgan also agreed with Harrell and Reed Hollander, a lawyer representing Johnson & Wales, that the institute and its plaintiffs, a salesman from Charlotte and a consultant from Lincolnton, have no basis to sue. They're not a school or a nonprofit that can claim to have been denied a similar grant.