Kansas governor thwarts legal settlement with Wichita business over COVID-19 restrictions

Kansas’ Democratic governor on Thursday scuttled a small legal settlement favored by top Republican officials between the state and the owner of a Wichita fitness studio forced to shut down during the first months of the coronavirus pandemic and then operate under restrictions.

The settlement would have cost the state $4,305.46 and ended a lawsuit filed in December 2020 by Ryan Floyd and his business, Omega Bootcamps Inc. The case has yet to go to trial in Sedgwick County District Court in Wichita, and Attorney General Kris Kobach asked Gov. Laura Kelly and eight leaders of the Republican-controlled Legislature to sign off, as required by state law.

Six of those eight legislative leaders are Republicans, and all six voted to approve the settlement during a live online WebEx meeting that Kelly convened. But Kelly opposed it, along with the House and Senate’s top Democrats, and under Kansas law, the governor’s action decided the issue.

Kelly did not explain why she opposed the settlement, though a spokesperson later said in a text that the settlement “is not in the best interest of the state.” The governor and the lawmakers had no public discussion of the settlement but met in private for 35 minutes with two members of Kobach’s staff.

The governor cut off public discussion before the private session with Kobach’s staff, even though House Democratic Leader Vic Miller asked to have the case verbally summarized in public. The Associated Press requested by email before the meeting that the discussion be held in public.

“We had this meeting here today, and you voted ‘no,’ ” Republican state Sen. Rick Billinger, who chairs the Senate budget committee, told Kelly, as she moved to adjourn the meeting immediately after the decision. “I mean, I don’t understand that.”

Kelly said, “I mean it’s very clear; I voted ‘no,’ ” and then said they could have a discussion after the group adjourned — out of public view.

The top Republicans in the House and Senate said Kelly’s action was “a purely partisan punishment.” Ryan Kriegshauser, an attorney representing Floyd and Omega Bootcamps, called Kelly’s action “an insult to common sense.”

“If the state takes a person’s livelihood away through targeted emergency orders, the state should have to reimburse basic expenses during that time,” Kriegshauser said in a statement.

The state asked the judge handling the lawsuit to dismiss it without a trial in October 2021. But the judge has not ruled on that request. Miller, a veteran attorney, said he expects the judge to dismiss the lawsuit.

“Just in general, when we become an easy target for cases that have no merit, it encourages other cases with no merit to be filed,” Miller said. “You have to look at the bigger picture.”

The lawsuit argued that the state used Floyd’s and his business’ private property “for the benefit of the general public” when it and local officials imposed restrictions to check the spread of COVID-19. Statewide restrictions started with Kelly’s order shutting down most businesses for five weeks, starting in late March 2020.

The lawsuit cited part of the state’s emergency management law that says people can seek compensation in court if their property is “commandeered or otherwise used” by state or local officials. Miller said that language doesn’t cover COVID-19 restrictions, while the lawsuit contends it does.

Kriegshauser said it’s notable that the judge has been “struggling” for more than 18 months with a decision on whether the case should go forward. Also, the Legislature whittled away over time at the power of the governor and local officials to shutter businesses or issue mask mandates in response to criticism of their actions.

“Of course there is merit to this action,“ Kriegshauser said of the lawsuit.

According to the U.S. Small Business Administration, Omega Bootcamps received two pandemic relief loans totaling about $24,000 in 2020 and 2021. In his lawsuit, Floyd said he wants an appraiser to be appointed to set the amount of damages owed by the state.

Kelly spokesperson Brianna Johnson noted those loans in defending the governor’s action.

Kobach was elected attorney general last year but served as secretary of state, Kansas’ top elections official, from 2011 to 2019, and Kriegshauser worked for him as an attorney and policy deputy in 2011-12. Lawyers outside the attorney general’s office have handled the state’s defense in the lawsuit.

Kelly’s action came the same day as the formal end of the U.S. national public health emergency for COVID-19. In Kansas, Republican legislative leaders forced an end to a state of emergency in June 2021, about three months earlier than Kelly wanted.

The lawsuit was put on hold by the judge in 2021 so that Kriegshauser could urge Kansas lawmakers to use federal COVID-19 relief funds to compensate small businesses for their financial losses during the pandemic. Republican lawmakers approved a plan that could have set aside tens of millions of dollars, but Kelly vetoed it, arguing that the “well-intentioned” measure violated a national coronavirus relief law.

In 2022, Kelly and lawmakers agreed on providing up to $50 million worth of refunds on the local property taxes paid by retail “storefront” businesses shut down or restricted during the pandemic, up to $5,000 for each business.

But critics have said the process of getting the aid is difficult, and the $5,000 cap discourages businesses from applying. The state Department of Revenue reported Thursday that it had approved 23 applications worth more than $22,000 in aid.