This looks like it might be related to filter settings. The default (when nothing is specified in appsettings) is CaseSensitive=false, AccentSensitive=true. Which does not correspond to the behavior you describe. Did you change the settings? I think this should give you the behavior you want:
"ClientSortingAndFilteringConfig": {
"CaseSensitive": "false",
"AccentSensitive": "false"
},
Please note that the section name will probably change to “ClientFilteringConfig” because it does not have impact on sorting anymore.