Today’s Ninth Circuit opinion in Vandevere v. Lloyd, No. 09-35957 (July 11, 2011), raises a couple of interesting questions having little to do with the merits of whether Alaska’s commercial fishing regulations worked a taking or a due process violation because they shortened the fishing season and limited the number of fish that can be harvested under the plaintiff’s entry permits and fishery leases.
First of all, what’s the Ninth Circuit doing reviewing a federal takings claim at all? As we’ve discussed repeatedly (most recently here), we thought that under Williamson County, federal courts could only review takings claims for compensation after a property owner has sought (and been denied) compensation in state procedures, which include an inverse condemnation claim in state court. A search of the Vandevere opinion reveals no citation to Williamson County. But check out page 9226 of the slip opinion, which references “a nearly identical case” in Alaska state courts in which:
The salmon fishers filed a complaint on October 25, 2005, alleging that the regulations “constitute unlawful takings or damage to [their] property interest in violation of the United States and Alaska Constitutions.” They sought “a declaration that these government actions are unconstitutional and unenforceable without just compensation paid to the plaintiffs for a taking or damage to their property.”
Vanek v. State, 193 P.3d 283 (Alaska 2008). In that case, the Alaska Supreme Court concluded that the fishers do not have a property interest in their fishing permits under either the takings or due process clauses of the U.S. or Alaska Constitutions, and have a limited property interest in the leases, and dismissed their claims.
The plaintiffs instituted their federal claims in 2007, one year before the Alaska Supreme Court ruled against them, asserting pretty much the same claims. While their federal claims would not be subject to the San Remo Hotel full faith and credit rule at the time of the filing of the federal court action because the state court litigation was not final, it seems like they would have been when the Ninth Circuit appeal was heard because the Alaska Supreme Court made a final decision in 2008. But again, no mention of San Remo Hotel in the opinion, only the conclusion that the question of whether property has been taken is a question of federal law, and that the federal courts “owe no deference to state courts.” Slip op. at 9228. If anyone can figure out why this case doesn’t fall within the Williamson County/San Remo Hotel rules, let us know or add your comment below.
The more intriguing part of the opinion comes in footnote 4 on page 9227-28 in the opinion’s discussion of whether federal or state law controls on the threshold question of what is “property” for constitutional purposes. The court acknowledged that states define property, but in the footnote suggested that there are limitations on a state’s authority to do so (a position we took in our amicus brief in Stop the Beach). We quote the footnote in full:
We pause to observe that any branch of state government could, in theory, effect a taking. See, e.g., Stop the Beach Renourishment, Inc. v. Fla Dep’t of Envtl. Prot., 130 S. Ct. 2592, 2601-02 (2010) (plurality) (writing that a state court, as well as a state legislature, can “take” private property). We also note that a federal court remains free to conclude that a state supreme court’s purported definition of a property right really amounts to a subterfuge for removing a pre-existing, state-recognized property right. That is, we need not take a state court at its word as to the kind of analysis that it is performing. See, e.g., Webb’s Fabulous Pharmacies, 449 U.S. at 160-64 (holding that a state may not simply recharacterize private property as public property by ipse dixit).
To take a far-fetched example, if a state enacts a statute to evict 10 people from their homes to create a park, the state’s courts could not avoid a conclusion that a “taking” had occurred by holding that the 10 people never had a property right in their houses. See, e.g., Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 448 (2d Cir. 1980) (“[A]lthough the primary source of property rights is state law, the state may not magically declare an interest to be ‘Non property’ after the fact for Fourteenth Amendment purposes if, for example, a longstanding pattern of practice has established an individual’s entitlement to a particular governmental benefit.”); accord Winkler v. County of DeKalb, 648 F.2d 411, 414 (5th Cir. 1981) (agreeing with that statement in Quinn).
The court held that when so-called “new property” is involved, state law is the final arbiter on what it includes. Thus, when things like licenses and permits are involved, the state has the last word on the rights it embodies. The Ninth Circuit relied upon Schneider v. California Dep’t of Corrections, 151 F.3d 1194 (9th Cir. 1998), a case that distinguishes between “new property” (public employement, welfare assistance, state licenses, etc.) and “old property” (which includes the more traditional forms of property based in the common law). State law defines the former, and thus can curtail or limit it with little constitutional interference, while federal courts applying the constitution make the final call on the latter.
At least in the Ninth Circuit. The court contrasted a First Circuit case holding that federal courts have the final say in defining property in both circumstances, and thus a state cannot limit licenses or the like with a completely free hand. See Hoffman v. City of Warwick, 909 F.2d 608 (9th Cir. 1990). The Ninth Circuit rejected that case’s rationale, concluding that “[i]t would be anomalous to conclude that, in the absence of a statutory or contractual provision for compensation, the state must compensate those regulated when the state regulates an interest that the state itself created in the first place and explicitly made subject to future regulation. In any event, Schnieder is the law of our circuit and we are bound to follow it.” Slip op. at 9232.
In other words, under the rationale of Schneider, Alaska would be free to limit the fishing licenses. Thus, the Ninth Circuit relied on the Alaska Supreme Court’s conclusion in the 1998 opinion which held that “the entry permits are not property interests.” Slip op. at 9233 (quoting Vanek, 193 P.3d at 285). The Ninth Circuit analyzed the shore fishery leases similarly, and concluded that the plaintiffs waived their regulatory takings claim because the leases themselves contained provisions in which the plaintiffs acknowledged the state’s right to regulate their rights under the leases. Slip op. at 9237.
Vandevere v. Lloyd, No. 09-35957 (9th Cir. July 11, 2011)