Thoughts on the Second Oral Argument in Knick v. Township of Scott

The much-anticipated reargument of this important property rights case did not make clear what the Court will do, but overall did not go as well for the property rights side as the first argument did. It is still unclear, however, which way potentially crucial swing voter Justice Kavanaugh will lean.

Earlier today, the Supreme Court heard an unusual second oral argument (transcript here) in Knick v. Township of Scott, an important Takings Clause property rights case. The Court previously heard argument in the case back in October, during the week when Justice Brett Kavanaugh had not yet been confirmed by the Senate, due to the ongoing investigation into allegations of possible sexual assault against him. When the Court ordered a reargument in November, many observers speculated that it was because the eight justices present for the original argument were equally divided in a 4-4 split on the case, and they needed Kavanaugh to participate in order to break the tie. Another possibility (not necessarily mutually exclusive with the first) is that the Court wanted greater consideration of various issues that had not gotten much attention in the initial argument. Prominent among those was the federal government's strange "Klingon forehead" argument, which in some respects could split the difference between the two sides in the case.

To briefly recap, the main point at issue in Knick is whether the Court should overrule or limit Williamson County Regional Planning Commission v. Hamilton Bank, a 1985 decision that makes it virtually impossible to bring many types of 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 secured a "final decision" from the relevant state regulatory agency and has "exhausted" all possible remedies in state court. Even then, it is still often impossible to bring a federal claim, because various procedural rules preclude federal courts from reviewing final decisions in cases that were initially brought in state court. I discussed the issues at stake in the case in a Wall Street Journal op ed, and more fully here, and in an amicus brief I coauthored 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.

Because of the significant likelihood of a 4-4 split after the initial argument, all expert observers' eyes were on Justice Kavanaugh today, as he might be the decisive swing vote. Kavanaugh asked only a few questions and certainly did not decisively tip his hand. But the few things he did say were not particularly comforting for the property owner's side.

In one exchange, he queried Solicitor General Noel Francisco on the idea that "An implicit premise of your argument and Petitioner's argument for overruling Williamson County, I think, is that the state courts aren't as good as the federal courts. Why is that in your view?"

The answer, as Francisco tried to explain, but not as well as he perhaps could have, is that a big part of the purpose making the Bill of Rights (including the Takings Clause) applicable against state governments through the Fourteenth Amendment was to ensure that people whose rights were violated by states could go to federal court to vindicate them. That is important to ensure uniform nationwide protection of federal constitutional rights, and to give victims a way to get around state judges who (especially if elected) sometimes have close ties to the state and local government officials who violated the rights in the first place. The issue is not that state courts are inherently worse than federal ones, but that those situations where they might be require a federal court backstop to ensure effective protection of federal constitutional rights. That is generally accepted for other rights protected by the Bill of Rights, and there is no reason why regulatory takings claims under the Fifth Amendment should continue to be an arbitrary exception.

In a later question directed at counsel for the Township of Scott, Kavanaugh hinted his possible recognition of some of this, when he asked her whether "the municipalities get a home court advantage in state court as compared to federal court." She, of course, answered no.

Still, Kavanaugh's framing of the issue is a bit troubling from the property owners' point of view, as it implies that the case for overruling Williamson County should only prevail if state courts generally "aren't as good as the federal courts," as opposed to merely that the latter are a necessary backstop for the former, as with other constitutional rights.

Justice Neil Gorsuch made the latter point well, when he emphasized "that there is no exhaustion requirement in [Section] 1983 [the federal statute that allows litigants to bring federal constitutional claims against state governments in federal court]? Now maybe there should be. And if there is, maybe there should be for Fourth Amendment claims and Fourteenth Amendment claims too because there are wonderful state courts capable of adjudicating the deprivation of Fourth Amendment rights, capable of adjudicating fully and fairly. I think we'd all agree the deprivation of Fourteenth Amendment rights. But we don't generally require that."

In other parts of the oral argument, Kavanaugh was virtually the only justice to show significant interest in the Solicitor General's strange "Klingon forehead" argument, under which Williamson County could be reinterpreted to bar bringing takings claims in federal court under Section 1983, but still allow them, in some cases, to be brought under 28 U.S.C. § 1331, which gives federal courts jurisdiction over "civil actions arising under the Constitution, laws, or treaties of the United States." The problem with this theory is that Williamson County did not actually distinguish between these two statutes, and that the same logic under which its reasoning precludes bringing regulatory takings claims under Section 1983 also applies to Section 1331. Section 1331 gives federal courts jurisdiction over "civil actions arising under the Constitution, laws, or treaties of the United States." The whole point of Williamson County is that there is no action "arising under" the Takings Clause of the Fifth Amendment, until the government has made a final decision refusing to pay compensation, and there is no sufficiently definitive refusal until the property owner has "exhausted" all possible state court remedies. For reasons I summarized here, here and in my amicus brief in Knick, I think this theory is seriously flawed. But if it's correct, it covers Section 1331 cases no less than Section 1983 cases.

At one point during the argument, Kavanaugh also appeared to suggest that the case turned on "statutory stare decisis" about the meaning of Section 1983 and noted that overturning a statutory precedent requires a higher burden of proof than overturning a constitutional decision. This part of the oral argument was very fragmented (Kavanaugh's remarks were interrupted, at times), so it's far from clear exactly what his view is. But if Williamson County is framed as a purely statutory decision, it is indeed less likely that the Court will overrule it.

Relative to the initial argument, not only Kavanaugh, but also many of the other justices focused much more on Section 1983 and much less on the Takings Clause and the Constitution. It's possible that's because the justices already explored the latter issues at some length in the earlier argument. But if they are indeed now viewing this as a primarily a statutory issue, that is not a good sign for the property owners.

Neil Gorsuch, however, did emphasize that "Williamson [County] purported to interpret the Constitution," not just Section 1983. Indeed, the interpretation of the latter is inevitably linked to the former. Section 1983 gives access to federal courts to litigants whom state or local governments have subjected to "the deprivation of any rights, privileges, or immunities secured by the Constitution and laws." If that does not cover takings cases like the one in Knick, it can only be because there hasn't been a "deprivation" of constitutional rights because the state government has not yet made a final determination that they refuse to pay compensation. Thus, there is no real way to separate out the constitutional and statutory issues here.

Overall, I am somewhat less optimistic after today's argument than I was after the initial argument in October. If Kavanaugh ends up saving Williamson County by casting the decisive vote in a 5-4 decision, it will mean the retirement of Justice Anthony Kennedy was a bad break for property rights advocates, because Kennedy was one of four justices who joined a 2005 concurring opinion forcefully criticizing Williamson County and urging the Court to consider overruling it.

That said, a wide range of outcomes are still possible, and it is by no means clear which side Kavanaugh will ultimately come down on. The same is true of Justice Elena Kagan, who I suggested might be inclined to join with the conservative justices in overruling Williamson because she is unwilling to accept the "Catch 22" situation under which takings plaintiffs are required to first exhaust all possible state court remedies before they can get into federal court, but then that very action prevents them from getting into federal court later. She reiterated that concern today, though she also suggested there might be some way to address it without overruling Williamson County. As other justices pointed out in response, it is unlikely that the Catch 22 problem can actually be solved in any other way.

UPDATE: I should note that after studying the federal government's position in the case more carefully, I think it is actually more favorable to the property owners than I suggested was the case here and especially here. I may expand on that point in a future post, if time permits.