Our read of the transcript of the oral arguments in Horne v. United States Dep't of Agriculture, No. 12-123, leads us to believe that despite its complexities -- Justice Kagan characterized the USDA raisin regulations that form the background of the case as "the world's most outdated law" and Justice Scalia called it "a crazy statute" -- it might be resolved on a straightforward principle of appellate procedure. But more about that below.
Who's On First, Raisin Producers On Second?
First, we turn to what was the day's Most Quotable Moment when, after a series of questions by Justices Sotomayor, Scalia, Kennedy, Ginsburg, and Alito to the petitioners' advocate Michael McConnell which revealed the Justices' confusion about whether his clients were raisin "handlers" or raisin "producers" -- and responses from Mr. McConnell that showed even he had difficulty keeping the labels straight -- Justice Breyer asked:
I'm just trying to get to what you're arguing about. And I might be off base by now. I feel like handlers, purchasers, raisins, like an old Abbott and Costello movie. I just want to see if I'm right. Tell me. Just say you're wrong and I don't go into it further.
Tr. at 19. But he followed that lighthearted pop culture reference with what is perhaps the most accurate summary of the issues in a case that has seemed to perplex commentators because even though the issue before the Court is fairly straightforward, it must be viewed though the opaque wrapper of the USDA's confounding raisin regulations:
There -- there are some people, they've been -- they are either -- they have some raisins, all right. And these particular people, whom the Department has said have acquired the raisins, it said they acquired the raisins. And so they're there with some raisins, and then the Government says: Do this thing with your raisins. And they don't want to do it, so they don't. They don't do it even though the law says do it.And then they say the law is unconstitutional and, moreover, you fined us a huge amount of money and we don't want to pay it because the law is unconstitutional, and we consider that money to be paid. Call it a fine, call it what you want. We consider we shouldn't have paid it and now we want it back and we want compensation and we think it's a taking and where do we go. Can't we make that argument in the Ninth Circuit? It's something like that; isn't that what we're arguing about?
Tr. at 19-20.
Constitutional Remedies and Constitutional Defenses
Mr. McConnell agreed that Justice Breyer's formulation of the issue was "almost exactly right," with the one exception that his clients argued they should not have to pay the fine, and should be able to raise the unconstitutionality of the regulations as a defense to the USDA's attempt to assess it. He then pointed out the key detail that lies at the analytical heart of the case: an action to recover just compensation in the Court of Federal Claims should not be considered the exclusive route to raise a takings claim as the USDA has argued (and that might not even be available to parties such as the Hornes, because a Tucker Act lawsuit is predicated on the taking already having been inflicted on the property owner). Mr. McConnell argued that it makes no sense to require a district court to impose a government action that the Hornes argue is a taking simply to ripen a CFC claim for compensation. To do so, he asserted, would be "pointless." Tr. at 21.
Mr. McConnell focused on two cases, Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), and Missouri Pacific Ry. Co. v. Nebraska, 164 U.S. 403 (1896) to make his point that the two levies by the USDA could be challenged as a taking. Eastern Enterprises addressed the part of the fine that represented the monetary equivalent of the raisins the USDA claims the Hornes should have given up, while Missouri Pacific addressed the penalty -- because each case concluded that a property owner could challenge a government action because it "would be a taking" if the owner were required to comply. Tr. at 22.
Our Old Friend Kaiser Aetna
As we noted in our preview, this is another way of articulating the notion that compensation is not the sole remedy under the Takings Clause, an idea my law firm colleagues have been articulating well before I went to law school, as exemplified by cases such as Kaiser Aetna v. United States, 444 U.S. 164 (1979), in which on behalf of the property owner they raised as a defense the argument that the imposition of a navigational servitude on what it believed was a private marina would be a taking, and could not be accomplished unless the government first condemned and paid for it. That case began when the Corps of Engineers instituted an action in the district court seeking a declaratory judgment that the marina was publicly navigable and an injunction prohibiting the owner from excluding the boating public. The owner asserted that to allow public navigation would be a taking, and did not seek compensation. See United States v. Kaiser Aetna, 408 F. Supp. 42 (D. Haw. 1976). Eventually, the Supreme Court agreed. Kaiser Aetna, 444 U.S. at 180 ("if the Government wishes to make what was formerly Kuapa Pond into a public aquatic park after petitioners have proceeded as far as they have here, it may not, without invoking its eminent domain power and paying just compensation, require them to allow free access to the dredged pond").
A Remand in the Works?
Mr. McConnell ended his argument by answering Justice Ginsburg's question of what, if anything, was left for the Ninth Circuit to do were the Supreme Court to agree with the Hornes and send the case back, given that the Ninth Circuit, it its first opinion, reached the merits of the takings defense and ruled against them before it did a 180 and concluded it had no jurisdiction. Mr. McConnell responded that all they want is a chance to go back to the Ninth Circuit and get en banc review on the merits, a process they were undertaking when the USDA claimed that the CFC was the exclusive forum in which to raise takings issues, and that the issue was a "jurisdictional" bar to the Ninth Circuit considering the merits.
About that Remand...
Up next was Joseph Palmore, the Assistant to the Solicitor General who argued the case for the USDA, who started where we suspected he might, by trying to tie the issues in this case to those in Koontz v. St Johns River Water Mgmt Dist., No. 11-1447. But when he attempted to harken back to Justice Sotomayor's initial questioning of Mr. McConnell (a series of questions about which of the petitioner's legal entities owned the raisins at issue, and what property was being taken), Justice Kagan interrupted to ask the type of question that can make an appellate advocate squirm unless they have anticipated the question and have an answer at the ready:
Mr. Palmore, before you do that, haven't you conceded the point that this is not jurisdictional?
Tr at 27. To that question, Mr. Palmore provided a candid answer that may have given the Court all it needs to resolve this case in favor of the Hornes on narrow grounds:
MR. PALMORE: We agree that the failure to go to the Court of Claims is not properly viewed as a jurisdictional defect. We did invoke Ninth Circuit precedent below stating that it was jurisdictional. And some of this cases -- this Court's cases put it in ripeness terms, which is an Article III concept. So there has been confusion -
That piqued Chief Justice Roberts' interest enough for him to ask his first question of the day:
CHIEF JUSTICE ROBERTS: When did you first raise the argument that it was jurisdictional?MR. PALMORE: In our opposition to the rehearing petition.CHIEF JUSTICE ROBERTS: And now you are - now you are changing back again and saying it's not?MR. PALMORE: There was Ninth Circuit precedent holding that it was jurisdictional, and we relied on that and there is certainly language from this Court -CHIEF JUSTICE ROBERTS: You relied on that when you got to rehearing. You didn't rely on that before you went before the Ninth Circuit, right?MR. PALMORE: That's correct.We think -- we think this is properly viewed as a substantive defect in the claim, so in a sense the Ninth Circuit in its initial panel decision ruled for the Government on a substantive defect one, there's no taking. And what it did on rehearing in our view, although it attached the wrong label to it, it substantively was correct in concluding that there was substantive defect number two -
At which point Justice Kagan reenterd the fray asking once again about "conceding" the issue because it had been waived (or, more accurately, "forfeited") by the USDA's failure to raise it earlier in the courts below:
JUSTICE KAGAN: But Mr. Palmore, if you are conceding now that this is not jurisdictional, it seems to me that your Tucker Act argument as a substantive argument, I mean, has been waived. You didn't raise that argument until the rehearing petition.MR. PALMORE: That would certainly be something that -- that the Ninth Circuit could consider in the event there were a remand here. But the Ninth Circuit did decide it. The substance of its bottom line conclusion was correct and all of its analysis was correct. It simply used the wrong words, so we think it is here.
All this talk of remand was like blood in the water to Justice Scalia, who went in for the kill:
JUSTICE SCALIA: I'm really confused. You are saying there ought to be a remand here because the question is not jurisdictional, which is just what your friend says, right?MR. PALMORE: Well, the Ninth Circuit -JUSTICE SCALIA: So the two of you are in agreement it ought to go back to the Ninth Circuit, they should do it on the merits, and -- and if that's wrong, we can review that.MR. PALMORE: If that happens, of course, as Justice Ginsburg pointed out, the consequence for us is they reinstate the prior panel opinion, in which -JUSTICE SCALIA: That may well be, but -MR. PALMORE: I'm not going to resist too strenuously that kind of remand, but they did decide it. And moreover, they decided something separate, which is at JA-305 they said something different, which is the kind of threshold defect in the takings claim turning on raisins, which is there is a capacity problem.
Tr. at 27-29. We suspect that the concession was enough to provide the Court with a way to solve this case without wading into the whole "producer" versus "handler" question and answering what was taken and when, issues that no Justice truly seemed eager to grapple with. Game over, man, game over.
With that, Mr. Palmore returned to his argument about "handlers" versus "producers," which prompted Justice Scalia to respond with the second Quotable Moment of the day:
JUSTICE SCALIA: Yes, but part of that penalty was, you know, your raisins or your life, right? I mean, it was --(Laughter.)JUSTICE SCALIA: -- you don't have to pay the penalty if you give us the raisins.
Tr. at 31.
"What a pity he ain't a prig!"
Mr. Palmer, perhaps sensing that he was on the back side of a downhill argument, attempted to paint the Hornes as artful dodgers, out to game the system by adopting "a business model that was an intentional, willful attempt to evade regulatory requirements in order to secure an unfair competitive advantage." Tr. at 30. But when Justice Alito asked whether this was all stuff the Ninth Circuit should decide, Mr. Palmore again mentioned the R-word:
MR. PALMORE: That was certainly not decided below, so a remand -- to the extent that this was preserved, a remand would be possible outcome there. We think, though, that that claim suffers from separate -separate threshold defects.
Tr. at 33. After some back-and-forth about Apfel, Justice Breyer returned to his earlier theme and challenged Mr. Palmore to contradict his "feeling this is somehow not a fight fit for the Court of Claims" was wrong:
JUSTICE BREYER: Fine. So they're making that kind of constitutional claim. Now, I would think if all you told me was that and I knew nothing about all these statutes, I would say that's the kind of claim that should be made in a Federal district court, period, not the Court of Claims. Because their government isn't going to compensate them for anything. That's against the whole point of the program.Either this program is valid or it isn't. And if it isn't, some authoritative set of courts should tell us that. So I have a feeling this is somehow not a right fit with the Court of Claims.
Now, you explain to me why that purely instinctive feeling at this point is completely wrong.
Tr. at 36-37. Mr. Palmore responded by arguing that the availability of just compensation for a taking wasn't simply a remedies problem, but was a "constitutional condition," and "[a]s long as there's just compensation, there simply is no violation." Tr. at 37. (Barista's note: Williamson County rears its ugly head again.)
Justice Kennedy then returned to an earlier thread about the issue before the Court:
JUSTICE KENNEDY: I thought that what we were going to decide was whether or not, assuming you can go to the Court of Claims, you must go to the Court of Claims, can you prefer to wait, have a penalty assessed against you and say this is unconstitutional, it's a taking. Your position is you can't say that. don't understand why. Other than, if you want to talk about Williamson and so forth, we can get into that.
Tr. at. 42.
The R-Word Again
Mr. Palmore's argument time began winding down and the Justices again returned to the question of remand, Justice Alito asking whether the USDA would be entitled to win again in the Ninth Circuit based on the reasoning in the panel's original opinion, and Justice Kagan asking whether there would be anything wrong with this disposition:
JUSTICE KAGAN: Mr. Palmore, what would be wrong -- would anything be wrong -- with a -- with a disposition of this Court that went something like this: Everybody agrees that this is not a jurisdictional issue, including the Government, so they got that wrong.Now, as to this whole business about the Tucker Act and whether the Tucker Act provides a remedy, the Government only started talking about that in a petition for rehearing en banc, and the Government can't do that. You know, it can't introduce an argument like this in a petition for rehearing en banc. So that's waived.And now, the Ninth Circuit can go and try to figure out whether this marketing order is a taking or it's just the world's most outdated law.(Laughter.)
Tr. at 48-49. This portion of the arguments ended with questions by Justice Breyer about whether as "producers" the Hornes had standing to raise the takings issues as "handlers," before Chief Justice Roberts once again showed irritation with the way the government was arguing the case:
CHIEF JUSTICE ROBERTS: I have to say -- I think it comes with less than good grace for you to criticize the other side for not having raised a particular argument. But I do want to clarify that you have no objection at this point for reversing the Ninth Circuit on the ground that they erred in saying that this -- they should have dismissed on jurisdictional grounds.
Tr. at 53. To which Mr. Palmore responded that he would not "resist that too strenuously ... [b]ut yes, we -- we frankly acknowledge and we acknowledged in our brief that we did not -- we did not suggest below that this was a jurisdictional defect," altough he expressly noted that "[o]ur position is that we're not acquiescing in a -- in remand."
In his short rebuttal, Mr. McConnell returned to the lecturn to emphasize again that the issue is is not "jurisdictional" and that his clients have standing, and the arguments ended quickly.
But the case seemed to be over, but for the shouting.
We're predicting a narrow ruling from the Court vacating the Ninth Circuit's amended opinion, holding that the issue is not "jurisdictional," and sending the case back to the Ninth Circuit for further consideration of the Hornes' request for en banc review. The multiple concessions from USDA's counsel are probably going to be too much to overcome, and a narrow remand would allow the Court to resolve the case without getting too far into the weeds about "handlers" and "producers," issues that no Justice seemed ready to tackle, and without getting into the merits of the takings issue.
Will we see another unanimous takings decision from the Court? Stay tuned.