Takings

Our Amicus Brief in Major Property Rights Case Currently Before the Supreme Court

I coauthored an amicus brief in an important takings case, on behalf of the Cato Institute, The National Federation of Independent Business, and several other organizations.

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The Supreme Court

Yesterday, we filed an amicus brief that I coauthored in Knick v. Township of Scott, an important property rights case currently before the Supreme Court. The brief was written on behalf of the Cato Institute, the National Federation of Independent Business, the Southeastern Legal Foundation, the Beacon Center of Tennessee, the Reason Foundation (which publishes Reason magazine and this website), and myself (serving as both an amicus and coauthor of the brief). The case is fairly technical in nature. But it nonetheless has great significance for property rights. I summarized the reasons why in this post:

The most important issue the Court will consider is whether to overrule Williamson County Regional Planning Commission v. Hamilton Bank, a 1985 decision that makes it very difficult or impossible to bring takings cases in federal court. Under Williamson County, a property owner who contends that the government has taken his property and therefore owes "just compensation" under the Fifth Amendment, cannot file a case in federal court until he or she has first gotten a "final decision" from the appropriate state or local regulatory agency and has "exhausted" all possible remedies in state court. Even after all of that, it is often impossible to bring a federal claim, because a variety of procedural barriers preclude federal courts from reviewing state court decisions in cases where the case was initially brought in state court. In some cases, governments defending against takings claims even exercise their right to "remove" the case to federal court, and then manage to get the case dismissed because the property owner did not manage to first "exhaust" state court remedies (a failure caused by the defendants' own decision to get the case removed).

Williamson County creates an egregious Catch-22 trap for property owners: before they can bring a claim in federal court, they must first go through state courts and administrative agencies. But the very act of going to state court makes it virtually impossible to later appeal the case to a federal court! This is the kind of Kafkaesque idiocy that gives the legal profession a bad name.

One might ask why it matters whether takings cases are litigated in state court or federal court. After all, both state and federal judges have to apply the Takings Clause of the Fifth Amendment, and both have to follow relevant federal court precedents. In many cases, the result will be the same, regardless of venue. But in some situations, particularly ones where precedent is unclear and the issues may be ambiguous, state courts could well be biased against property owners, because they have close connections with the state and local governments that undermined the property rights in question.

As our brief explains, the Williamson County rule is grossly inconsistent with the way the Supreme Court treats other constitutional rights. It is also at odds with the original meaning of the Fourteenth Amendment, which "incorporated" the Bill of Rights against state governments in large part for the purpose of protecting citizens against abusive state governments by giving them access to federal courts. Property rights were among the most important constitutional rights the framers of the Amendment sought to protect in this way, particularly in the case of African-Americans and white Unionists whose rights were threatened by hostile state governments in ex-Confederate states. The brief also explains why Williamson County is ripe for reversal under the Supreme Court's established criteria for overruling flawed precedent.

In a post describing his own amicus brief in the case, prominent takings litigator Robert Thomas notes that "the average property owner simply cannot fathom why—if a state or local government has taken property in violation of the Fifth Amendment—he cannot bring a takings claim in federal court until he has first pursued and lost an inverse condemnation claim in state court." The average property owner is not the only one who is confused on that score. I am a professional property and constitutional law scholar, and I can't fathom it either.

In the 2005 case of San Remo Hotel v. City and County of San Francisco, four justices—including key swing-voter Anthony Kennedy—joined then-Chief Justice William Rehnquist's concurring opinion calling on the Court to reconsider Williamson County. We hope that the justices will take this opportunity to reverse a badly flawed precedent.

I am grateful to my coauthors Trevor Burrus (Cato), Ilya Shapiro (Cato), and Luke Wake (NFIB), for their excellent work on the brief, and to my former student Meggan DeWitt (Cato) for her invaluable efforts to keep this project on track.

Since this brief is coauthored by both Ilya Shapiro and myself, it risks exacerbating the #IlyaConfusion problem. Fortunately, you can learn how to tell the two Ilyas apart by consulting my definitive guide to the subject!

UPDATE: The Cato Institute has put up a post about the brief here.

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  1. An ancillary problem with takings is “just compensation”

    Most compensation is based on current use instead of highest and best use. A good example is the Dallas Cowboy stadium in Arlington TX. A lot of the small homes had a value of $100k-$150k as one family residences, yet the land was $200k as part of the development of the new stadium (highest and best use).

    1. Also, what about the decline in value that happens over the years while the taking is being proposed?

      1. That was really critical in Detroit, I recall, where the city government would deliberately cut off police and fire protection to areas the administration had plans for, so that property values would decline and save money during a later taking.

        1. That’s a pretty egregious case (that I admittedly had not heard of), but even without deliberate sabotage, the value will still drop if potential buyers know it’s on the proverbial chopping block.

    2. That’s not even FMV, which is a bad enough standard in itself.

    3. How do you know a stadium is the highest and best use?

      We have a downtown stadium in St. Louis that sits empty. Stuff happens.

      1. Maybe the st louis rams could draw bigger crowds – if they had stayed in St Louis. – Though that is a subject for different topic whereby the team owners get to screw the taxpayers.

        My point with the cowboy stadium deals more with the general corruption/screw job of the homeowner and taxpayer when you have a private use condemnation disquised as a “public use” condemnation. ie stadiums, industrial redevelopment, etc., as compared to the real public use condemnations such as schools and road.

        The developer stand to gain when the condemnation is at a price less than highest and best use.

        1. Was all the property used for the stadium obtained through condemnation?

          1. Virtually all the property acquired was acquired via the threat of condemnation or via condemnation. I will defer to the facts and circumstances test the courts have used under 1033 IRC as to when the threat of condemnation comes into existence vs speculation of the possible condemnation, but once the plans are far enough along, the threat comes into existence. My recollection is that approx 1/3 held off for actual condemnation.

            1. I wll add that the city of arlington did pay some small amount for relocation expenses, but the difference did not take into account the delta between home value vs highest and best use.

            2. What is that test?

              ISTM that the threat here is not something that appears out of the blue one day. There is a gradual process, from initial rumors to final selection of property that will affect the value.

              Once there is word that “This is a possible site” values will drop somewhat. Then it gets worse as the choice becomes clearer. I’d say anyone who sells out of fear of condemnation, once there is any reason to believe condemnation is a possibility, is selling under threat. It’s a question of whether the homeowner wants to take the risk. Different homeowners will act differently, but that doesn’t change the main point.

  2. The average property owner is not the only one who is confused on that score. I am a professional property and constitutional law scholar, and I can’t fathom it either.

    Typoe or Thinkoe?

  3. A potential difficulty here is that the case presented as the leading Catch-22 horrible in the parade, Property Management Group v. City of Philadelphia, was nothing like what Professor Somin presented it as.

    Responding to complaints that unscrupulous tow companies were towing legally parked vehicles, Philadelphia enacted a rule requiring calling a police officer to verify the illegality and issue a ticket before a vehicle can be legally towed.

    The plaintiffs sued, saying that by making them wait for a police officer to arrive, the city was effectively taking their property and giving it to the parkers to use. They argued the law served no public purpose and should be enjoined.

    The district court resolved this claim on the merits. It said that the Ordinance was an attempt to balance the rights of vehicle and lot owners and hence was a legitimate public purpose. The law was valid and they weren’t entitled to enjoin it. So assuming a taking occurred, all the lot owners would be entitled to was compensation for the period of trespass on their property. Given this, it said Pennsylvania courts would require plaintiffs to file a claim for compensation before seeking redress in state courts. And because they hadn’t done so, federal courts also had to follow state law and require the same exhaustion of remedies.

  4. (cont)

    The plaintiffs got a full decision on the merits, one I think was correct. After all, the vehicle owners’ position was that the previous rule unfairly took THEIR property by allowing tow companies to unilaterally serve as judge, jury, and executioners in matters where they have a financial interest (they keep the impoundment fees).

    The balance the City struck might have been the right or the wrong balance. But I don’t think its character as a public regulation balancing interests rather than a purely private property transfer could be seriously contested by anybody who’s bothered to actually read the case. Hence it is a quintessential public use.

    In sort the plaintiffs got a full decision on the merits, one I think was correct. The reason they didn’t get the relief they sought was that they weren’t entitled to it. No unfairness here at all.

    Professor Somin’s characterization of the case as fundamentally unfair or putting the lot owners in a Catch-22 is just, forgive me, totally bogus. It’s such an unfair characterization of the actual decision as to be misleading.

    And if that’s true for the lead horrible, I’d forecast rain on the whole parade.

  5. The District Court then said that no talking occurred. The allegedly illegally parked vehicle owner, not the City, is the one trespassing on the property, and the vehicle owner has no connection to the City.

    Further, it said a property owner has no constitutional right to engage in vigilante self-help remedies to deal with trespassers. The City would have fully met the lot owners’ legitimate constitutional rights if it had enacted a flat ban on private towing, and required the log owners to file a civil action for trespass, get a judgment, and have the sheriff execute it. Far from a right to self-help, lot owners have no right to have any better remedy than the common-law one, and have the same obligations to use courts and civil process to resolve their disputes as anyone else. When they skip ahead of the standard civil process and resort to private tow companies, they do so solely at the City’s, and the public’s, sufferance, and only so long as their doing so doesn’t inconvenience the public.

    Any legitimate claim for damages they may have is a claim against the vehicle owner, not the City.

    1. ReaderY,

      Thanks for the details and comments on the PA case.

      The whole thing is flawed, IMO, because the underlying takings claim there is complete nonsense.

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