Choice of Law in Takings Cases After Tyler v. Hennepin County (III)

The Court’s departures from standard choice of law principles (or, takings doctrine for federal courts gurus).

Let me sum up what I've shown so far in this series about my forthcoming article about the Supreme Court case Tyler v. Hennepin County, Minnesota. As I showed on Monday, the U.S. Supreme Court held that surplus equity constitutes "private property" sufficient to support claims under the Takings Clause. To reach that holding, Chief Justice Roberts (author of the Court's opinion in Tyler) consulted legal sources that seem odd to property lawyers. Takings cases like Webb's Fabulous Pharmacies v. Beckwith seem to hold that, "[b]ecause the Constitution protects rather than creates property interests, the existence of a property interest is determined to reference to existing rules or understandings that seem from an independent source such as state law." But Roberts did not look solely at state law; he also consulted a wide range of sources from early English and American law. As I showed yesterday, however, Roberts was not free-lancing; he was following choice of law principles familiar from federal constitutional law and federal courts doctrine. When state actors seem to be converting a federal constitutional right into a "dead letter," the Court held in Indiana ex rel. Anderson v. Brand, federal courts can look past the most relevant sources of state law and measure a plaintiff's federal constitutional rights independently.

In Tyler, the Court followed Brand's principle in part. In Brand, to measure Anderson's contractual rights, the Court looked past the Indiana judicial opinions about her tenure and studied Indiana statutes about teacher tenure and Indiana contracts case law. In Tyler, Minnesota private creditors don't get to keep surplus equity after foreclosures, the Court noted, and Minnesota state agencies don't get to keep the equity in foreclosed-on property besides real estate.

But in Tyler the Court followed the Brand principle only in part. The Court consulted many legal sources besides Minnesota sources, from early English and American practice, and from its own case law. And even if the Court had followed Brand in every respect, Tyler could not have revolutionized choice of law doctrine in federal takings litigation. Tyler broke some new ground, but it didn't and couldn't displace earlier precedents on different choice of law takings problems.

Today, I want to take up those differences between Tyler and the approach associated with Brand. If yesterday I explained Tyler's federal courts context for property lawyers, today I'm explaining the property- and takings-specific aspects of Tyler for federal courts specialists. (One disclaimer before I do that. I have some sense what federal courts specialists think about Tyler, but I'm nowhere near as confident as I am about what property specialists think. So all you federal courts mavens out there: If you think I'm reading your section of the room wrong, I'll be most grateful to be corrected before my article gets too far into production!)

Tyler departed from the approach associated with Brand in two main respects. Most important, the Court didn't rely wholly on Minnesota law to determine whether Tyler had "private property" under the federal Constitution. Although the Court didn't say so, in its methods it was relying that the "brooding omnipresence in the sky" I mentioned Monday. In other words, to determine what "private property" meant in Tyler's context, the Court looked past Minnesota law and consulted the general law, associated most often with the 1842 case Swift v. Tyson (overruled by Erie Railroad Co. v. Tompkins). Tomorrow, I'll give a qualified defense of the Court's reliance on general law. Here, though, I just want to explain what Chief Justice Roberts and the rest of the Court were doing and assuming, so readers can evaluate the Justices' thinking for themselves.

Will Baude noticed Tyler's reliance on general law on this blog shortly after the case was handed down, and he (and Stephen Sachs, Jud Campbell, Daniel Epps, and Danielle D'Onfro) have  written at length about general law in scholarship. I hope the following summary is appropriately quick. To ascertain what "private property" might mean as a term of art, one might consult seminal treatises and writings about property familiar at the ratification of the Fifth Amendment, find broad definitions of property, and figure out whether particular entitlements in law (like surplus equity) fit those definitions. In any field of law, however, the "general law" consists of a transjurisdictional body of persuasive authority on which national and state courts can rely as they fill in their local common law. So to determine whether a particular entitlement is private property, one might also conduct an analysis a lot like the analysis Chief Justice Roberts conducted in Tyler. That is, one might canvas: relevant English legal history (relevant provisions of Magna Carta and Acts of Parliament); treatises (Blackstone) familiar at the Founding; and contemporaneous American practice (early acts of Congress and state common law). One could also canvas the Supreme Court's later precedent, if and to the extent that it was drawing on the same general law principles evident at the ratification of the Fifth Amendment.

Tyler studied one last set of sources, Minnesota sources showing that the Minnesota legislature had written special rules favoring state agencies in real-estate foreclosures. In his blog post, Will assumed that that line of argument differed from reliance on general law, that it embodies the strategy I'm associated with Brand. Maybe, but not necessarily. That line of argument could also be understood as a continuation of the general law strategy. After all, Minnesota common law, and Minnesota tax foreclosure processes for property besides real estate, accorded with the understanding of surplus equity manifest in the sources probative of the general law.

To repeat (and, to avoid confusion), Tyler doesn't announce that federal courts should always look to general law to determine whether claimants have constitutional private property. Federal courts have authority to cross-check state law to deal with the "dead letter" hazard. My point here is that general law provides one way to conduct that cross-check, one different from Brand's strategy of judging a claimant's rights against the law of the state applied fairly and consistently.

The Tyler strategy also avoids Justice Oliver Wendell Holmes's complaint about the general law, that it hangs over state law like a "brooding omnipresence." Holmes raised that complaint about the general law in a case testing whether the general maritime law preempts state law. Erie Railroad used the same complaint to discredit general law in federal diversity cases. In cases like Tyler, though, when federal courts consult the general law, the general law helps fill in the meaning of a constitutional term of art. And a clause in the federal Constitution is supreme over state law.

At the beginning of this post, I said that Tyler parts ways with Brand in two respects. Here's the second: In the context of takings litigation, Tyler does not mark off the only reservation on the general rule that "private property" is usually determined by consulting state law. A few of the Court's takings cases mark off other exceptions, and Tyler didn't and couldn't displace those exceptions. I run through the various lines of cases in my article, but here are the two most relevant alternate exceptions. One came in Murr v. Wisconsin in 2017. In Murr the Court warned that federal courts can review claimants' legal property interests, under some inchoate federal law reservation, to head off "the risk of gamesmanship by landowners, who might seek to alter [boundary] lines in anticipation of regulation." The Murrs had two lots side by side, one vacant and one built on. The Court was worried that the two lots were in substance one parcel, and that the vacant lot was being left vacant to increase the chances of winning a per se regulatory takings claim (under Lucas v. South Carolina Coastal Council) after a state natural resources agency limited new development in the area. Murr's holding marks off a second reservation on the view that property rights are normally established in state law, to deal with owner-side conduct parallel to the "dead letter" problem.

Second, I strongly doubt that federal courts will follow state law-or consult general law as in Tyler-when state laws threaten entitlements that seem core property interests by any measure. I am thinking in particular of rights of exclusive control and possession over fast land. When state laws trench on those rights, in some cases the Supreme Court doesn't even bother with choice of law analysis, and in the other cases its analysis is conclusory. Take Cedar Point Nurseries v. Hassid, one of the cases that is supposed to confirm the rule that in takings litigation property rights are creatures of state law. Cedar Point Nurseries paid lip service to that rule but didn't follow it. The regulation challenged in the case forced farm operators to let union organizers come onto their farm land for limited times to try to unionize their farmworkers. The Court concluded that the claimants had private property in the legal interests in dispute. The Court said that "one of the most essential sticks in the bundle of rights that are commonly characterized as property" and added a three-case string citation. Maybe, in Cedar Point Nursery and cases like it, federal courts are just holding that the right to exclude is clearly property as a matter of federal law. Maybe they are assuming that the right to exclude is part of property thanks to general law, and that any dispute over that issue was settled in federal law long ago. Either way, they're not following state law, and they're also not studying general law as closely as just happened in Tyler.

Again, though, in this post I explained the legal reasoning the Court applied in Tyler, but I reserved judgment on whether the Tyler strategy is convincing normatively. In my view, the Tyler strategy makes a certain amount of sense, as a second-best strategy. Tomorrow, I'll make that qualified case for Tyler on the merits.