Michael McConnell responds to questions about the raisins case


Michael McConnell, the lawyer in the raisins case I blogged about here and here wrote in with the following:

One of your readers ("formerly known as 'Stash'") posed some excellent questions about Horne v Dep't of Agriculture, the raisin takings case. Because the Ninth Circuit held that no taking occurred, the parties have not litigated valuation. This should not deter summary reversal, if the Court is otherwise so inclined, because the next step is simply to remand for a determination of just compensation. But your readers still may be curious about the answer.

The Hornes raised the Takings Clause as a defense against an order of the Department of Agriculture requiring that they pay the government $483,843.53, which was the government's assessment of the value of the raisins, plus penalties. (Remember, the Hornes did not comply with the expropriation.) Presumably, the relief is simply to reverse that order. Nothing could be less complicated.

The commenter asks about other potential cases if the Hornes win: "What would be the government exposure to the line of raisin brokers inundating the Court of Claims for compensation for past reserve contributions?"

There are two things to bear in mind. First, there has been no raisin reserve since 2010-11 (and by the way, no "chaos" in the market in its absence—as anyone paying attention in Econ 101 would have guessed). In light of the six year statute of limitations, there could be no "inundation," but at most claims based on a year or two of takings.

Second, the government sells the expropriated raisins for somewhat less than full market value and spends the money. (For example, in 2002-03, the government sold expropriated raisins for $649.47 per ton, netting $118 million.) Even assuming the government is entitled to an offset against full market value on account of the cartel effect—which is unlikely under the precedents—the price the government receives is surely the lower bound of just compensation.

In any event, this has little bearing on the petition for certiorari. The most remarkable thing about this case is that twice the Ninth Circuit has rejected the Hornes' claims based on arguments the government disdained to defend. The Court may wish to avoid repeating the spectacle of the oral argument in the jurisdictional phase, when no one defended the panel decision.