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Lawsuit against NC regarding Google, Inc. PDF Print
Written by Lauren Ohnesorge   
Wednesday, 25 July 2007 11:54

Below is a copy of the lawsuit filed today against the state of North Carolina regarding incentives used to lure Google, Inc. to Lenoir.

 

 

 

The copy was made available by the North Carolina Institute for Constitutional Law.

Absent its Exhibit A, which contains excerpts from  Session Law 2006-66; Session Law 2006-66 can be found at http://www.ncga.state.nc.us/Sessions/2005/Bills/Senate/HTML/S1741v8.html.

 

-----------------------------------

 

 

 

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF WAKE 07 CVS _______


MICHAEL C. MUNGER )
BARBARA HOWE, and )
MARK WHITELEY CARES, )
)
Plaintiffs, )
) COMPLAINT, AND
v. ) PETITION FOR ) DECLARATORY JUDGMENT
)
STATE OF NORTH CAROLINA; )
JAMES T. FAIN III, Secretary of the )
North Carolina Department of Commerce, )
in his official capacity; REGINALD )
HINTON, Acting Secretary of the North )
Carolina Department of Revenue, in his )
official capacity; DAVID T. MCCOY, )
State Budget Officer for the Office of State )
Budget and Management, in his official )
capacity; MICHAEL F. EASLEY, )
Governor of the State of North Carolina, )
in his official capacity; GOOGLE INC.; and )
MADRAS INTEGRATION, LLC, )
)
Defendants. )


Plaintiffs, by and through undersigned counsel, complaining of the defendants, allege and say that:
INTRODUCTION

This action is brought pursuant to the Declaratory Judgment Act, N.C. Gen. Stat. §§ 1-253, et seq. and pursuant to other applicable law, to challenge and obtain relief from the unconstitutionality of certain “subsidies” (consisting of tax benefits and other so-called economic incentives or subsidies) granted to one or more private sector internet service provider Google entities with respect to Google business operations in Lenoir, Caldwell County, North Carolina.
This action arises from legislation (the “Google legislation”) adopted by the North Carolina General Assembly on July 6, 2006 providing tax benefits and exemptions from retail sales and use tax totaling approximately tens of millions of dollars to Google with respect to its building and operating an internet data center in North Carolina. N.C. Gen. Stat. § 105-164.3(8e), 164.13 (55). The Google legislation discriminates among taxpayers, creates a taxing scheme which is not uniform, which discriminates among taxpayers, which is not for a public purpose only, which establishes an exclusive emolument not in exchange for public service, and constitutes an unjust and inequitable exercise of the power of taxation -- thereby violating various provisions of the North Carolina Constitution. Further, the Job Development Incentive Grant(s) referred to herein, from one or more State Government defendants, to Google are not for a public purpose only, create a taxing scheme which is not uniform, discriminate among taxpayers, are not for a public purpose only, and establish an exclusive emolument not in exchange for public service -- thereby violating various provisions of the North Carolina Constitution.

PARTIES
(Plaintiffs)
Pursuant to the Declaratory Judgment Act and other applicable law, the individuals described in paragraphs 4 through 6 below are, for the purposes of this action, denominated as “plaintiffs;” such plaintiffs are petitioning for a declaration as to the unconstitutionality of the legislation and resolutions at issue and to obtain relief from such unconstitutionality.
Plaintiff Michael C. Munger is a citizen and resident of the State of North Carolina, and is a taxpayer to the government of the State of North Carolina. Plaintiff Munger pays various types of taxes to the government of the State of North Carolina, including state income taxes and state sales taxes on items purchased.
Plaintiff Barbara Howe is a citizen and resident of the State of North Carolina, and is a taxpayer to the government of the State of North Carolina. Plaintiff Howe pays various types of taxes to the government of the State of North Carolina, including state income taxes and state sales taxes on items purchased.
Plaintiff Mark Whiteley Cares is a citizen and resident of the State of North Carolina, and is a taxpayer to the government of the State of North Carolina. Plaintiff Howe pays various types of taxes to the government of the State of North Carolina, including state income taxes and state sales taxes on items purchased.

(Defendants)
Pursuant to N.C. Gen. Stat. § 1-260 and other applicable law, the persons and entities described in paragraphs 8 through 15, below, are joined as parties who have an interest which would be affected by the declarations sought and relief sought by plaintiffs, and are, for purposes of this action, denominated as “defendants.”
Defendant State of North Carolina is a general purpose state government which is capable of being sued, which is being sued, for purportedly authorizing (through the General Assembly) and/or granting the tax subsidies and other so-called economic development subsidies of which complaint is made; the capital of the defendant State of North Carolina is in Wake County.
Defendant Fain is Secretary of the North Carolina Department of Commerce. Defendant Fain is sued in his official capacity only. Defendant Fain is tasked under the Google legislation with making a written determination that threshold investment levels “have been or will be invested” in real property or eligible business property. N.C. Gen. Stat. § 105-164.3(8e)d. Defendant Fain’s principal office is in Wake County.
Defendant Hinton is Acting Secretary of the North Carolina Department of Revenue. Defendant Hinton is sued in his official capacity only. Defendant’s Hinton’s principal office is in Wake County.
Defendant McCoy is the State Budget Officer for the defendant State’s “Office of State Budget and Management.” Defendant McCoy is sued in his official capacity only. Defendant McCoy’s principal office is in Wake County.
Defendant Easley is the Governor and of the State of North Carolina. Defendant Easley is sued in his official capacity only. Defendant Easley’s principal office is in Wake County.
Defendants State, Easley, McCoy, and Fain are sometimes referred to herein as the “State Government Defendants.”
Defendant Google Inc. is a for-profit, duly chartered corporation, incorporated in the State of Delaware; Google Inc.’s principal office, as well as the North American headquarters of Google, are located in Mountain View, California. Google is licensed to do business in North Carolina.
Defendant Madras Integration, LLC is a Limited liability Company, formed and/or incorporated in the State of Delaware; Madras Integration, LLC’s principal office is located in Wilmington, Delaware. Madras Integration, LLC is licensed to do business in North Carolina. Defendant Google Inc. is the ultimate parent company of defendant Madras Integration, LLC.
Defendant Google Inc. and/or defendant Madras Integration, LLC will have and/or is/are having an internet data center built for the operation of an internet search server facility in Lenoir, Caldwell County, North Carolina.

JURISDICTION AND VENUE
This action is brought pursuant to N.C. Gen. Stat. § 1-253, et seq. (the Declaratory Judgment Act), for the purpose of determining the constitutionality of certain actions of the State of North Carolina. This action is also brought pursuant to other applicable law. This Court has jurisdiction over the subject matter of this action pursuant to N.C. Gen. Stat. § 1-253, et seq. (Declaratory Judgment Act) and pursuant to other applicable law.
This Court has jurisdiction over the parties pursuant to N.C. Gen. Stat. § 1-75.4.
Venue is proper in this Court pursuant to N.C. Gen. Stat. § 1-82.

FACTUAL BACKGROUND

Passage of Google Legislation by General Assembly
On or about December 8, 2005, representatives and agents of Google met with State officials, including employees of the Department of Commerce and the Department of Revenue, at Raleigh, North Carolina. Upon information and belief, the purpose of this meeting was to discuss the establishment of a Google internet data center in Caldwell County, North Carolina by Google.
On or about December 9, 2005, representatives and agents of Google met with State officials, including employees of the Department of Commerce, and representatives and agents of Burke, Caldwell, and McDowell counties, at Charlotte, North Carolina. Upon information and belief, the purpose of this meeting was to discuss the establishment of an internet data center in Caldwell County, North Carolina by Google.
On or about December 13, 2005, representatives and agents of Google met with State officials, including employees of the Department of Commerce, and representatives and agents of Burke, Caldwell, and McDowell counties, at Charlotte, North Carolina. Upon information and belief, the purpose of this meeting was to discuss the establishment of an internet data center in Caldwell County, North Carolina by Google.
On or about February 1, 2006, State officials, including employees of the Department of Commerce, met with representatives and agents of Caldwell, Cleveland, and Rutherford counties. Upon information and belief, the purpose of this meeting was to discuss the establishment of a Google internet data center in Caldwell County, North Carolina by Google.
On or about February 2, 2006, State officials, including employees of the Department of Commerce, met with representatives and agents of Caldwell County. Upon information and belief, the purpose of this meeting was to tour a possible site for a Google internet data center in Caldwell County, North Carolina.
On or about February 8, 2006, the Caldwell County Commission and Lenoir City Council made an enhanced grant proposal to Google regarding Google’s constructing an internet data center in Caldwell County, North Carolina.
On or about February 22, 2006, representatives and agents of Google met with State officials, including employees of the Department of Commerce, as well as representatives of Duke Power. Upon information and belief, the purpose of this meeting was to discuss the site for a proposed internet data center to be established by Google.
On or about April 14, 2006, representatives and agents of Google met with State Officials, including Defendant Fain and employees of the Department of Commerce and Department of Revenue, and with representatives of the City of Lenoir and Caldwell County, and others, at Department of Commerce offices in Raleigh, North Carolina. Upon information and belief, the purpose of this meeting was to discuss the establishment of an internet data center in Caldwell County, North Carolina by Google.
On or about May 24, 2006, a bill was introduced in the House chamber of the North Carolina General Assembly to exempt certain internet data center facilities from sales and use taxes. (HB 2645). A substantially similar bill was introduced in the Senate on May 25, 2006. (SB 1964). Both HB 2645 and SB 1964 proposed amendment to N.C.G.S. §§ 105-164.3, 105-164.13. The substantive provisions of HB 2645/SB 1964 were added to the Current Operations and Capital Improvements Appropriations Act of 2006, SB 1741/S.L.2006-66, at section 24.17(a) (this section and only this section [of legislation] is hereinafter referred to as “Google legislation”).
The Current Operations and Capital Improvements Appropriations Act of 2006, SB 1741/S.L.2006-66 was ratified on July 6, 2006, and signed into law by the Governor Michael F. Easley on July 10, 2006.
The Google legislation creates certain tax exemptions described at ¶¶ 31-33, 36-37 below for an “eligible internet data center” and defines the same as a facility that satisfies each of the following conditions:
(a) The facility is used primarily or is to be used primarily by a business engaged in Internet service providers and Web search portals industry 51811, as defined by North American Industry Classification System adopted by the United States Office of Management and Budget as of December 31, 2002;
(b) The facility is comprised of a structure or series of structures located or to be located on a single parcel of land or on contiguous parcels of land that are commonly owned or owned by affiliation with the operator of that facility;
(c) The facility is located or to be located in a county that was designated, at the time of application for the written determination required under sub‑subdivision d. of this subdivision, either an enterprise tier one, two, or three area pursuant to G.S. 105‑129.3, regardless of any subsequent change in county enterprise tier status.
(d) The Secretary of Commerce has made a written determination that at least two hundred fifty million dollars ($250,000,000) in private funds has been or will be invested in real property or eligible business property, or a combination of both, at the facility within five years after the commencement of construction of the facility.
The Google legislation specifically exempted from the retail sales and use tax sales of electricity for use at an eligible internet data center and eligible business property to be located and used at an eligible Internet data center, and defined “eligible business property” as “property that is capitalized for tax purposes under the Code and is used either:
(a) For the provision of Internet service or Web search portal services as contemplated by G.S. 105‑164.3 (8e)a., including equipment cooling systems for managing the performance of the property.
(b) For the generation, transformation, transmission, distribution, or management of electricity, including exterior substations and other business personal property used for these purposes.
(c) To provide related computer engineering or computer science research.
Pursuant to N.C.G.S. § 105-164.13 (55), if the level of investment required by G.S. 105‑164.3(8e)d. is not timely made, then the retail sales and use tax exemption is forfeited. If the level of investment required by G.S. 105‑164.3(8e)d. is timely made but any specific eligible business property is not located and used at an eligible Internet data center, then the retail sales and use tax exemption for the eligible business is forfeited. If the level of investment required by G.S. 105‑164.3(8e)d. is timely made but any portion of the electricity is not used at an eligible Internet data center, then the exemption provided for the electricity sales is forfeited.
A taxpayer that forfeits an exemption under N.C.G.S. § 105-164.13(55) is liable for past taxes avoided as a result of the forfeited exemption. However, if the forfeiture is triggered due to the lack of a timely investment required by G.S. 105‑164.3(8e)d., then interest is computed from the date the taxes would have been due if the exemption had not been allowed. For all other forfeitures, interest is computed from the time as of which the eligible business property or electricity was put to a disqualifying use.
Upon information and belief, no debate on the Appropriations Act/SB 1741 with respect to provisions related to any tax exemption for internet data center facilities occurred while that bill was under consideration on the floor of the Senate.
Upon information and belief, no fiscal note accompanying the SB 1741 referenced any tax exemption for internet data center facilities.
The Google legislation provides an exemption from retail sales and use tax for Google, in connection with Google’s building and operating an internet data center at Lenoir, Caldwell County, North Carolina. While the legislation does not specifically reference Google, it was acknowledged by representatives of the State of North Carolina after enactment of S.L. 2006-66 that the subsidies at issue were specifically intended for Google with respect to building and operating an internet data center in Lenoir, North Carolina. The Google legislation was in fact for the direct benefit of Google alone.
The financial commitment included in the General Assembly’s package for Google (in the Google legislation) totals approximately tens of millions of dollars in connection with Google’s building and operating an internet data center in Lenoir, North Carolina.
S.L. 2006-66, including the Google legislation, was signed into law by Governor Easley on or about July 10, 2006; a copy of relevant excerpts of S.L. 2006-66 are attached as Exhibit A and incorporated by reference.

Job Development Investment Grant to Google
The Job Development Investment Grant (JDIG) consists of sustained annual grants, which the State provides in its discretion, to certain new and expanding businesses. The amount of the grant is determined, in part, by the amount of withholding taxes paid by the grantee’s new employees.
JDIG is administered by an Economic Investment Committee, comprised of five members: the Secretary of Commerce, the Secretary of Revenue, the Director of the Office of State Budget and Management, and two private sector members appointed by the General Assembly.
The Economic Investment Committee is authorized to award up to 25 grants in a single grant year. These grants can result in payments to a business for up to 12 years. Each year the total amount paid out may reach $15 million, meaning that the Committee has the ability to provide up to $180 million in benefits to the 25 businesses over a 12-year period.
The final Community Economic Development agreement must be reviewed and signed by the Attorney General.
On or about December 28, 2006, the State’s Economic Investment Committee voted unanimously to award a Job Development Investment Grant to Google in connection with Google’s construction and operation of an internet data center in Lenoir, North Carolina. Under the terms of the JDIG agreement approved by the committee, a 12-year grant will be established. Pursuant to the JDIG agreement, for each year that the company meets the required performance targets, the state will provide a grant equal to 75 percent of the state personal income withholding taxes derived from the creation of new jobs.
Further Background Allegations Regarding the Tax
Benefits for Google and Regarding the Google
Project in Lenoir, Caldwell County, N.C.

“Google,” when used herein, refers to Google Inc. and to all entities related to Google and all entities involved in the Google project as described below which are or will be the recipients of the grants and exemptions described below, and such entities are inclusive of Google Inc. and Madras Integration, LLC.
“The Google project,” when used herein, refers to the Google-related project pursuant to which Google is establishing and/or has established a Google facility in Caldwell County [N.C.] as described in paragraphs 47 and 48, below.
“The tax benefits for Google,” when used herein, refers to the grants and exemptions described below, which have been and/or are being provided and/or will be provided by the State of North Carolina to Google, in connection with the Google project. “The tax benefits for Google” also refers to any State-Google agreement/undertaking for the State to provide Google with the grants and exemptions described below, in connection with the Google project.
On January 19, 2007, the “State of North Carolina [,] Office of the Governor,” issued a news release. That news release, among other things, reported on the following:
(a) “Internet search engine Google Inc. plans to locate a new facility in Caldwell County [N.C.] . . . [--] a data center in Lenoir [N.C.] to support Google’s online operations;”
(b) In connection with the Google project, the State of North Carolina is awarding Google a Job Development Incentive Grant, pursuant to which “Google could receive a maximum benefit of $4.8 million.”
On March 7, 2007, the North Carolina Senate Finance Committee conducted a hearing regarding the Google project and the tax benefits for Google. At that hearing, the committee distributed a document with the heading “Elements of the State & Local Recruiting Package/Google Internet Data Center/Caldwell County – Tier 1.” Among other things, that document described the aforementioned JDIG grant for Google. The document also referred to what it called a “State Incentive Package,” which included the State of North Carolina’s providing Google with a “Sales Tax Exemption on Machinery & Equipment and Electricity.” Pursuant to that exemption, the State of North Carolina provides Google with an exemption from having to pay certain retail sales taxes and/or use taxes in connection with Google’s purchase of certain machinery, equipment, and electricity.
“The purported laws,” when used herein, refers to statutes and other purported law pursuant to which the tax benefits for Google have been and/or will be provided, including North Carolina General Statute §§ 105-164.3(8e), 164.13 (55).
The purported laws and the tax benefits for Google were put into place in connection with and for the Google project; in enacting the Google legislation, the General Assembly had no internet data center in mind as a potential beneficiary of the Google legislation other than the internet data center contemplated by the Google project.
Thorough the present time, the Google legislation, the purported laws, and the tax benefits for Google would not exist
were it not for the Google project, and/or
were it not for Google having requested and/or demanded the Google legislation, the purported laws, and the tax benefits for Google, or were it not for Google having requested and/or demanded something similar to the Google legislation, the purported laws, and the tax benefits for Google.
Pursuant to the purported laws, the extent to which the State of North Carolina is to provide the tax benefits for Google is dependent upon the extent to which Google meets certain conditions and/or criteria. Also pursuant to the purported laws, the extent to which Google is to receive the benefit of the tax benefits for Google is dependent upon the extent to which Google meets certain conditions and/or criteria.
The State Government Defendants do not own or operate Google or the Google project or the Google facility in question in Lenoir, Caldwell County, North Carolina.
The Google legislation contains no recitation that the Google project in Caldwell County would not have gone forward were it not for the Google legislation or something very similar to the Google legislation.
Google’s operation of the facility in question in Lenoir, Caldwell County, North Carolina will be a business operation pursuant to Google’s overwhelmingly predominant intention and objective of maximizing Google’s profitability. Those profit-making intentions and objectives of Google are similar to the profit-making intentions and objectives of numerous other businesses in North Carolina. Google’s operation of the facility in question in Lenoir, Caldwell County, North Carolina will not be for the provision of public social services or public infrastructure or public amenities. Rather, the Google facility in question is a facility to enable Google to satisfy customers of Google.
In states other than North Carolina, Google is proceeding with projects similar to the Google project.
Plaintiffs are not eligible for and have not received any tax forbearance or subsidies or grants similar to the tax benefits for Google.
Through the present time, defendant State does not plan to provide any person or entity, other than Google, tax exemptions, grants, and subsidies pursuant to the purported laws.
Plaintiffs are, have been, and /or will be directly and/or sufficiently injured by the tax benefits for Google in that those benefits unlawfully deplete the funds of the State to which the Plaintiffs contribute through their tax payments, thereby diminishing the funds available for lawful purposes and imposing disproportionate, additional, and increased financial burdens on the Plaintiff taxpayers.


Count 1 - N.C. Constitution
(Google Legislation Violates Exclusive Emoluments Provision)
Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through 59.
On its face, the Google legislation contains no recitation to indicate that it is for a public purpose or that the public will receive any direct, primary, or non-incidental benefit from it, or that the legislation is intended to address an exchange for Google’s provision of any public services.
The Google legislation violates Article I, Section 32 of the North Carolina Constitution in that the preferential benefits, tax credits, grants and/or subsidies provided to Google pursuant to this legislation accrue to Google’s private financial benefit and to the shareholders of Google and are thus exclusive and separate emoluments not in exchange for any public service. Google is provided a special tax benefit merely for operating its own private business.


Count 2 - N.C. Constitution
(Google JDIG Award Violates Exclusive Emoluments Provision)
Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through 62.
The Google JDIG award violates Article I, Section 32 of the North Carolina Constitution in that the preferential benefits, tax credits, grants and/or subsidies provided to Google pursuant to this agreement accrue to Google’s private financial benefit and to the shareholders of Google and are thus exclusive and separate emoluments not in exchange for any public service. Google is provided a special direct grant benefit merely for operating its own private business.

Count 3 -- N.C. Constitution
(Further Allegations of Violations of Exclusive Emoluments Provision)
Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through 64.
The tax benefits for Google, and the purported laws, as applied for Google and/or on their face, are in violation of Article I, Section 32 of the North Carolina Constitution in that the tax benefits for Google and the purported laws accrue to Google’s private financial benefit and to the shareholders of Google, and Google is provided special tax benefits/grants merely for operating its own private business, and thus the tax benefits for Google and the purported laws are exclusive and separate emoluments not in exchange for any public service.
Plaintiffs are entitled to the relief sought by this complaint.

Count 4 - N.C. Constitution
(Google Legislation Violates the Public Purpose Clause)
Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through 67.
The Google legislation violates Article V, Section 2(1) of the North Carolina
Constitution in that the benefits, tax credits, grants and/or subsidies provided to Google pursuant to this legislation provide direct government subsidies for a private business enterprise, namely Google and Google’s shareholders and are not for a “public purpose only.”

Count 5 - N.C. Constitution
(Google JDIG Award Violates the Public Purpose Clause)
Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through 69.
The Google JDIG award violates Article V, Section 2(1) of the North Carolina Constitution in that the benefits, tax credits, grants and/or subsidies provided to Google pursuant to this legislation provide direct government subsidies for a private business enterprise, namely Google and Google’s shareholders and are not for a “public purpose only.”

Count 6 -- N.C. Constitution
(Further Allegations of Violations of the Public Purpose Clause)
Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through 71.
The tax benefits for Google, and the purported laws, as applied for Google and/or on their face, are in violation of Article V, Section 2 (1) and Article V, Section 7 of the North Carolina Constitution in that the tax benefits for Google are not for a “public purpose only;” for example:
(a) the tax benefits for Google do not primarily benefit the public, but primarily benefit and promote Google, which is a private entity,
(b) the tax benefits for Google are not of a mere incidental benefit to Google, but, instead, are a direct benefit to and for Google,
(c) to the extent that there is or will be any public benefit from the tax benefits for Google, that public benefit does not pass directly to the public but would accrue only by first passing through a private intermediary (to wit, Google), and the ultimate gain to be derived from the tax benefits for Google accrues directly to a private entity (to wit, Google) and not to the general public,
(c) the tax benefits for Google assist in the establishing, aiding, or maintaining of a private business enterprise (to wit, Google), whose sole object is the individual gain of the proprietors, no matter how beneficial to the community such enterprise may be,
(d) the tax benefits for Google constitute a form of government financing of private enterprise (to wit, Google) by means of public funds, which is entirely foreign to a proper concept of our constitutional system -- experience has shown that such encroachments will lead inevitably to the ultimate destruction of the private enterprise system,
(e) the tax benefits for Google are not for a use which is public -- the tax benefits for Google constitute benefits which are not received on a common basis by the public, and, instead, are received by a particular private entity (to wit, Google),
(f) the ultimate net gain or advantage from the tax benefits for Google is not the public's as contradistinguished from the gain and advantage accruing to a private entity (to wit, Google), and
(g) even if, at some time in the past, something like the tax benefits for Google and the purported laws would not have violated the “public purpose only” clauses, it is now a matter of fact (and also a matter of law) that, in light of the passage of time and accompanying societal changes (after any aforementioned past period, if any, of non-violation), the tax benefits for Google and the purported laws now do violate the “public purpose only” clauses; for instance, the passage of time and accompanying societal changes and experience now establish that the tax benefits for Google and the purported laws:
are not for a public purpose only,
unfairly, inequitably, and counterproductively exceed the appropriate constitutional role and competence of State government,
unfairly, inequitably, and counterproductively violate the rights and liberties of the people and businesses of North Carolina,
are contrary to the achievement of public purposes (including being contrary to this State’s interests in the promotion and defense of economic liberties and the free enterprise system),
unfairly, inequitably, and counterproductively involve the State government (and the hard-earned monies from taxpayers for the funding of State government) in providing unjustified preferential treatment to Google which other persons and businesses in the State (including persons and businesses which compete with Google in one way or another) do not receive,
unfairly, inequitably, and counterproductively involve the State government (and the hard-earned monies from taxpayers for the funding of State government) in making decisions about what specific businesses to promote and favor (to the exclusion of other businesses), especially given that the State government is not justified in making those economic decisions and is not competent to make economically sound decisions about what specific businesses to promote and favor,
unfairly, inequitably, and counterproductively involve the State government (and the hard-earned monies from taxpayers for the funding of State government) in the distorting of risk assessment by business entities,
unfairly, inequitably, and counterproductively involve the State government (and the hard-earned monies from taxpayers for the funding of State government) in establishing an unlevel playing field for the conduct of business -- contrary to government’s proper role of promoting a level and neutral playing field devoid of unwarranted favoritism,
unfairly, inequitably, and counterproductively involve the State government in conducting its affairs in secret and without sufficient public scrutiny, and/or
to the extent that the “public purpose” concept is a fluid one, its current requirements (pursuant to any such fluidity) now entail that the “public purpose” requirement is violated by the tax benefits for Google and the purported laws, in the ways described in this Count ______, and/or
This paragraph discusses the State Supreme Court’s majority opinion in Maready v. City of Winston-Salem , 342 N.C. 708, 467 S.E.2d 615 (1996), but, in doing so, makes no acknowledgement of whether or not such majority opinion is presently still good law. Nonetheless, if it is still good law, such Maready majority opinion addressed “N.C.G.S. §158-7.1, which authorizes local governments to make economic development incentive grants to private corporations. . .” Maready, 342 N.C. at 712, 467 S.E.2d at 618 (emphasis added). Such majority opinion did so in the context of the aforementioned “public purpose only” clause. Further, such Maready majority opinion discusses:
the local government's efforts to better serve the interests of its people[; and how] [e]ach community has a distinct ambience, unique assets, and special needs best ascertained at the local level [; and how] Section 158-7.1 enables each to formulate its own definition of economic success and to draft a developmental plan leading to that goal.

Id., 342 N.C. at 725, 467 S.E.2d at 625-626 (emphasis added). The tax benefits for Google and the purported laws have not been devised or enacted at the local level, but at the remote “State of North Carolina” level. That “State of North Carolina” level lacked the justification and competence to assess the distinct ambience, unique assets, and special needs of Lenoir, North Carolina and Caldwell County, North Carolina. That “State of North Carolina” level lacked the justification and competence to micromanage the business affairs related to Lenoir, North Carolina and Caldwell County, North Carolina. Accordingly, for the further reasons as stated in the preceding sentences of this paragraph, and for the reasons as stated in the preceding paragraphs of this Count 6, the tax benefits for Google, and the purported laws, as applied for Google and/or on their face, are in violation of Article V, Section 2 (1) and Article V, Section 7 of the North Carolina Constitution in that the tax benefits for Google are not for a “public purpose only.”

Count 7 -- N.C. Constitution
(Violations of the “Taxation Must Be Fair and Equitable” Clause)
Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through 74.
The tax benefits for Google, and the purported laws, as applied for Google and/or on their face, constitute an unfair, unjust, inequitable, arbitrary, and capricious exercise of the power of taxation, and accordingly violate Article V, Section 2(1) of the North Carolina Constitution, which states, “The power of taxation shall be exercised in a just and equitable manner . . . .”

Count 8 - N.C. Constitution
(Google Legislation Violates the Uniformity of Taxation Clause)
Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through 76.
The Google legislation and the tax benefits for Google and the purported laws violate Article V, Section 2(2) of the North Carolina Constitution in that they violate the requirement of uniformity of taxation within classifications and were not enacted by general law nor are they uniformly applicable to all businesses in every county, city and town and other unit of local government, and in that the legislation, purported laws, and tax benefits were specifically enacted for the benefit of Google. The Google legislation and the tax benefits for Google and the purported laws also violate Article V, Section 2(2) of the North Carolina Constitution in that they treat Google in a massively preferential way relative to other similarly situated taxpayers, and do so without a rational basis

Count 9 - N.C. Constitution
(Any Contract Signed Pursuant to the Google Legislation is Unconstitutional
as Not for a “Public Purpose Only”)
Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through 78.
The Google legislation violates Article V, Section 7 of the North Carolina Constitution in that the legislated benefits, tax credits, grants and/or subsidies accruing to Google pursuant to this legislation, upon information and belief, will be part of a contract or contracts between various agents of the State and Google. Any such contract granting benefits, tax credits, grants and/or subsidies and any resulting land, buildings, equipment, roads, etc. will accrue to the ownership and control of Google and will be utilized to generate a profit for Google and Google’s shareholders and thus, would not be for the accomplishment of a “public purpose only.”

Count 10 - N.C. Constitution
(Any Contract Signed Pursuant to or in Furtherance of the Google JDIG Award is Unconstitutional as Not for a “Public Purpose Only”)

Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through.80.
The Google JDIG award violates Article V, Section 7 of the North Carolina Constitution in that the awarded benefits, grants and/or subsidies accruing to Google pursuant to this legislation, upon information and belief, will be part of a contract or contracts between various agents of the State and Google. Any such contract granting benefits, grants and/or subsidies will accrue to the ownership and control of Google and will be utilized to generate a profit for Google and Google’s shareholders and thus, would not be for the accomplishment of a “public purpose only.”

Count 11 - N.C. Declaratory Judgment Act
Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through 82.
The Google legislation adopted by the North Carolina General Assembly and signed into law by Governor Easley providing various tax exemptions to Google and the purported laws and the tax benefits for Google are unauthorized, unlawful, unconstitutional and arbitrary.
There is a genuine, subsisting, and justiciable controversy between and among the parties to this action arising out of conflicting interpretations of and contentions as to the constitutionality of the actions by the State Government Defendants.
The State Government Defendants are proceeding with carrying out the terms of various promises and benefits outlined in the Google legislation, the Google JDIG award, the purported laws, and the tax benefits for Google, in that, upon information and belief, the site has been cleared and construction has begun and is underway on the proposed facility for Google in Caldwell County, North Carolina.
Pursuant to N.C. Gen. Stat. §1-253 and other applicable law, Plaintiffs are entitled to a declaration that the Google legislation, the purported laws, the tax benefits for Google, and any resolutions, and terms and conditions of any contracts entered into pursuant to such legislation or resolutions by the State and any agents thereof are unconstitutional and thus, unlawful.

Miscellaneous
Plaintiffs incorporate by reference and reallege fully herein the contents of the foregoing paragraphs 1 through 87.
A further basis for establishing the unconstitutionality referred to in Counts 1-11 above would be if the Google project in Caldwell County would have gone forward
even had the tax benefits for Google not been provided,
even had any State-provided tax exemptions and subsidies for Google been significantly less than the tax benefits for Google, and/or

even had the State not complied with Google’s request and/or demand for the Google legislation, the purported laws, and the tax benefits for Google (or for something similar).

Plaintiffs reserve the right to conduct discovery on and to present evidence on whether that further basis exists.
Allegations herein pertaining defendants Easley, McCoy, and Fain are made with respect to them in their official capacities only, and not in their individual capacities.
Defendants State, Easley, McCoy, and Fain have already acted and are acting in such a way (as to the providing of the tax benefits for Google) such that the subject matter of this action is ripe for decision by the Courts.
Defendants State, Easley, McCoy, and Fain have had and continue to have roles in the providing of the tax benefits for Google, and their roles in that regard are sufficient to subject them to liability in this action.
Prior to the filing of this suit, plaintiffs had made sufficient requests of defendants State, Easley, McCoy, and Fain that such defendants refrain from providing any of the tax benefits for Google; notwithstanding such request, those defendants have not given an indication that they will be refraining from the provision of such benefits.
Plaintiffs have sufficient interest and stake in the subject matter of this action. An actual controversy, and adverseness of interest, exist between plaintiff and defendants with respect to the subject matter of this action. The subject matter of this action does not present mere abstract questions, but presents a concrete and real conflict between adverse interests.
Each paragraph in this Complaint shall be deemed to be based on and to be taking into account facts which have been set forth and alleged in the paragraphs preceding each such paragraph. Each paragraph in this Complaint shall be taken in conjunction with and shall be deemed to be related to and/or based upon the facts as alleged in any paragraphs which preceded it.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs respectfully pray:

A. That the Court issue an order declaring that the Google legislation, passed by the N.C. General Assembly, and any resulting contractual agreement are unauthorized, unlawful, arbitrary and in violation of the State Constitution as alleged in this complaint;
B. That the Court issue an order declaring that any JDIG award to Google is unauthorized, unlawful, arbitrary and in violation of the State Constitution, facially or as applied, as alleged in this complaint;
C. That the Court issue an order declaring that the tax benefits for Google and the purported laws are unauthorized, unlawful, arbitrary and in violation of the State Constitution, as applied and/or on their face, as alleged in this complaint;
D. That the Court issue a permanent order that the State Government Defendants permanently and immediately refrain, cease, and desist from providing any of the tax benefits for Google;
E. That the Court issue an order that, to the extent that the State Government Defendants, or any agents thereof have, pursuant to the tax benefits for Google, the purported laws, the Google legislation, resolutions, or other resulting contracts or agreements, already provided any public money or benefits to Google, or any other agent thereof, the State Government Defendants use all reasonable and appropriate means to recover such money or benefits plus interest from Google or the receiving entity, whereby such money paid and/or the value of any benefits received plus interest will be refunded, returned, and/or reimbursed to the public treasury of the State;
F. That the Court issue an order requiring the State Government Defendants that the State Government Defendants recoup, monetarily and otherwise, any and all of the already-provided and hereafter-provided tax benefits for Google plus interest;
G. That the Court order such other relief including relief by way of injunction as the Court deems proper;
H. That the Court designate this case as an “exceptional or complex” matter pursuant to Rule 2.1 of the General Rules of Practice;
I. That the Court award to plaintiffs reasonable attorney’s fees and costs, as against the State Government Defendants, the to the extent allowed by law;
J. That the Court tax the costs of this action against the State Government Defendants; and

K. That the Court award such further and additional relief as the Court may deem necessary and proper.



This ______ day of July, 2007.

NORTH CAROLINA INSTITUTE FOR CONSTITUTIONAL LAW


________________________
J. Aldean Webster III (State Bar No.10097)



____________________________
Jeanette Doran Brooks (State Bar No. 29127)
225 Hillsborough Street. Suite 245
Raleigh, North Carolina 27619
Phone: (919) 838-5313
Facsimile: (919) 838-5316

Attorneys for the Plaintiffs

  
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