Appellate oral argument, as they say, is supposed to be a "conversation" between the bench and counsel. But the overall impression we were left with after reviewing the transcript of yesterday's Supreme Court oral arguments in Murr v. Wisconsin, the case about the "larger parcel" or "denominator" in regulatory takings cases, was that just about everyone in the courtroom was talking on different wavelengths.
Don't get us wrong -- arguing counsel for all the parties and amicus did a pretty good job, in our view. They are advocates, after all, and their job is to champion their clients' position, not to solve the Court's confusion, and problems that appear entirely self-inflicted.
Two of the parties (the Murrs and the State of Wisconsin) urged the Court to adopt a bright-line rule, each 180-degrees apart. The Murrs' counsel argued for a presumption that fee simple metes-and-bounds should be the starting point in determining what counts as "property" for purposes of the Takings Clause, while Wisconsin's Solicitor General argued that title means pretty much nothing in takings cases -- state law defines property, and the states are, in effect, free to redefine it by regulation. That lots have a "legal link" (whatever the heck that might mean) is the key to defining property. Tr. at 34 ("Not at all, Your Honor. Our test is if two lots have a link, a legal link under State law, then they are one parcel. If they have no legal link under State law, then they are completely separate.").
Contrasting the certainty that each of these parties urged, counsel for the County seemed to want to play the part of chaos agent: he argued for bootstrapping a Penn Central-type "factors" test into what constitutes property. A boon for law review articles, perhaps, but not very good for property owners (and regulators) trying to predict ahead of time whether some action would be a taking of property. But maybe that's the point, because this approach -- "Penn Central squared" as Wisconsin's lawyer cleverly put it -- would not chill regulation one bit.
We thought all counsel did an admirable job, fielding a series of non-stop questions from the bench that indicated to us that the Justices maybe haven't quite grasped what they've waded into here, or at least haven't yet really figured out what this case is about.
Justice Kennedy, who cast the fifth and deciding vote in Kelo, believed that larger parcel analysis in eminent domain only applies where there's one parcel, not two. See Tr. at 25 ("That just can't be if they're separate lots. That's not the law in any State that I know."). But, as the Murrs' counsel gently reminded Justice K, it is precisely the other way around: the "three unities" come into play when the owner whose land is being condemned claims that she is owed damages due to the taken parcel's severance from a second, different parcel. Tr. at 25026 ("No. That's when they're two separate parcels. It's the hotel and parking lot example.").
If the Court adopts the federal government's argument and lifts some form of straight takings' three unities into regulatory takings -- an analysis built on a set of factors, and thus probably appealing to Justice Kennedy -- we hope he first clears up the misconception about the three unities. Loose talk about eminent domain law also doesn't give us a lot of comfort that his Kelo perspective was on the mark.
He wanted to talk Pennsylvania Coal, fragmentation of support estates, and other difficult hypos:
Let's go back to Holmes case. There's a hundred acres. There are 50 columns of coal to hold up the --to hold up the ceiling. That he says is okay. No compensation. But wait. Suppose instead of one people -- one person owning all 50 acres, suppose 50 people each own one acre. And in some cases, the column runs through the acre and some it doesn't. Does that make any difference?
Tr. at 28. Maybe we're just cavemen and have a hard time with your frightening and confusing world, but were we counsel, we would have had a hard time not revealing our total confusion about this line of questioning. Other counsel acted like they knew what he was talking about, but we think they were just fooling. If anyone can clarify what Justice Breyer was getting at on pages 28 and 29 ("You opinion -- in your opinion, if, in the Holmes case, instead of one person owning the whole 50 acres as one lot, there would have been 50 people who each owned an acre. Now, it looks the same, you know, the columns are in the same place, et cetera, and you're saying that does make a difference."), please ring us.
Justice Breyer also seemed to misconstrue Lingle, where the Court killed the "substantially advance" test for takings; whether a regulation is reasonable or not isn't a takings question:
Well, what about adding here when I look to see the reasonableness of the regulation. I mean, suppose in Holmes' case, the regulation had said you have to leave columns of a thousand feet of coal. But every expert said, or everyone who knew about it, said you don't need more than 50 feet.
Tr. at 54. And back to the columns.
She seemed to misunderstand Palazzolo, and believes that its rule about takings claims not being extinguished by the transfer of ownership only applies when the takings claim is "the exact same takings claim." Tr. at 9. We're not even sure what that means. And, we're not sure how the Murr childrens' takings claim is different than their parents' claim: both would assert that the restrictions in the regulations on alienability are a taking of their property rights, no?
She also also seemed to like the background principles include "all of state law"/bitter with the sweet argument advanced by the County's brief:
And why should we do that? If we're looking to State law, let's look to State law, the whole ball of wax. In other words, saying: Well, when I buy those two lots, they're really not two lots anymore. According to State law, they are one lot.
Tr. at 17. As the Murrs' counsel correctly noted, footnote 7 of Lucas limited "background principles" of state law to things like nuisance and other existing restrictions that inhere in title. It did not say that regulations are background principles. Justice Kagan acknowledged the correctness of counsel's recitation of Lucas, but then promptly ignored it, suggesting that Wisconsin's "merger" regulations are background principles:
JUSTICE KAGAN: Well, I -- I think that you're right, Mr. Groen. It's like the legal recognition of property. But the legal recognition of property has something to do with lot lines, and it also has something to do with when lots are merged, when two lots are merged into one. And why would we ignore that question of merger?
Tr. at 17.
Justice Sotomayor seems completely unbound by existing decisions. For example, her take on Palazzolo: "They [the Murrs] got them in 1982 subject to knowing that they could only develop on one." Tr. at 71. And this exchange:
JUSTICE SOTOMAYOR: But the parents --it may have been a taking for the parents, but they never charged it. The children when they took were subject to the regulation, and they knew it.MR. GROEN: And -JUSTICE SOTOMAYOR: They could have said, no, I don't want two contiguous ones, Dad and Mom. I'll go buy the next-door lot from someone else.MR. GROEN: And this Court in Palazzolo v. Rhode Island ruled that the notice that the Murr children may have had --they actually didn't know, but let's assume that they did know -
Tr. at 8.
His questions, as one might predict, seemed very owner favorable. The most interesting exchange occurred on page 37-38, where he asked Wisconsin's counsel a hypothetical that was very much like the Murrs' case, the only difference being whether the two parcels were expressly and affirmatively merged (his hypo), versus merged by what the state views as the owners' conduct (transferring the second parcel to the owners of the first).
Chief Justice Roberts
He seemed most concerned with future cases, and how sharp lawyers on both sides could plan around any ruling the Court makes here. His hypothetical, posed to Wisconsin's counsel, asked whether there would be a different argument if the two parcels were formally owned by two spouses:
CHIEF JUSTICE ROBERTS: Well, that makes it seem we're talking about it in justice and fairness. That seems to make it seem a little quirky that these owners are not entitled to treat them separately, while if they -- they just happen to record them in -- in separate names that they would be a entirely different situation.
Tr. at 40.
Didn't have much to say with only a question or two, so we think we know where she's going to end up on this one. But she did know the record better: Justice Kennedy thought the vacant parcel has a barbecue,and Justice Ginsburg correctly noted it is a volleyball area. Tr. at 25.
Silent Cal, as always. But we also think we know where he's going to end up.
Our thoughts for what they are worth:
- What's all this about "merger?" There was a lot of back-and-forth about whether the two Murr parcels were "merged" or not under Wisconsin law. Some said yes, some said no. We think the answer is no (the record lot is still there, on the books). But in the end, we think it shouldn't matter, because this case shouldn't turn on whether the parcels were merged or not. After all, the only question the Court is trying to figure out is what the "property" interest is that the regulations allegedly have taken; if the answer to that question was that the lots haven't been formally merged, then the Murrs win going away, because there's no dispute the separate lots remain separate lots, at least formally. But we don't think the Court was eager to adopt that line of reasoning. Why? Read on.
- What's the "property?" There were flashes here are there on what we think is the real question here: identification of the property interest that was allegedly taken by the regulation. Our own opinion is that the regulation takes the Murrs' right to sell their parcel. Is the right to sell property a fundamental right? Yes. End of case, Murrs win here, since all they are asking for here is a ruling on what the property interest is (they aren't claiming they win their takings case now, only that they get to go back and prove that their property has been taken).
- Eagle feathers. The Court has dealt with the right to sell before, in Andrus v. Allard, 444 U.S. 51 (1979), the case involving restriction on the sale of eagle feathers. There the Court concluded that the right to sell -- like the right to exclude -- is a fundamental aspect of property. But, the Court also concluded that the regulation's prohibition on sale of eagle feathers didn't wipe out the value of the feather, because the owner could do something else with it. Exhibit it, for example.
- Is a loss of the right to sell to unrelated third parties a taking? Yes, the regs wiped out the Murrs' right to sell their vacant parcel, and for the most part, the ability to develop it, but are these restrictions the equivalent of taking the parcel from them? Id. at 65 ("The regulations challenged here do not compel the surrender of the artifacts, and there is no physical invasion or restraint upon them. Rather, a significant restriction has been imposed on one means of disposing of the artifacts. But the denial of one traditional property right does not always amount to a taking."). That would be the question on remand, we think.
- No per se rules? None of the Justices seemed eager to adopt a per se rule or presumption in either direction: "JUSTICE KENNEDY: But are you -- you're talking just about State law. It seems to me that your position is as wooden and as vulnerable a criticism as -- as the Petitioner's. You say, whatever State law -- basically you're saying, whatever State law does, that defines the property. But you have to look at the reasonable investment-backed expectations of the owner." Tr. at 34.
- Three Unities? The federal government argued for what we characterize is an importation of the "straight taking" test for larger parcel - the three unities: title, contiguity, and use. We could easily see a majority of the Court agreeing with that formulation in some way, and we think this is the center of gravity in this case.
With a likely split in the Court, we hope the absence of a ninth Justice doesn't cause us to end up with a plurality, or an affirmation by an equally-divided Court. That will likely result in even more confusion, in an area that is already as confused as it need be, with no better example being the Justices themselves yesterday.