We're continuing our Detroit-themed posts today, with this one about auto bailouts and takings.
We generally don't post trial court decisions, preferring to wait until we have a published opinion from a court of appeals. But from time to time, we have made exceptions, like here, where the counsel involved are well-known and the issue looks like one that might eventually go up the chain, and indeed has once already.
So it is in Colonial Chevrolet Co., Inc. v. United States, No. 10-647C (Sep. 9, 2015), in which the Court of Federal Claims denied the government's motion to dismiss a takings claim. The plaintiffs are (former) General Motors and Chrysler dealers whose dealership contracts were sloughed off as part of the $38 billion bailout of the auto manufacturers. As part of the deal, the companies were required to cancel many of their franchise agreements, "forcing the dealerships to close." According to the plaintiffs, "Chrysler terminated 789 dealerships and GM terminated 1,454 dealerships." Slip op. at 3.
The CFC earlier denied the government's first motion to dismiss, and the Federal Circuit affirmed, concluding that the franchise contracts were property interests protected from uncompensated takings. The appellate court, however, saw no allegation in the complaint that these property interests were worth anything, so remanded to the CFC to allow the plaintiffs to amend their complaint to allege economic loss.
After amendment, the government again moved to dismiss:
The government argues that plaintiffs have failed to allege sufficient facts in their amended complaints to meet the “economic loss” requirement for establishing a taking under the Fifth Amendment. According to the government, nothing was taken from plaintiffs because, in the but-for worlds where the alleged taking did not occur, GM and Chrysler would have been liquidated, making plaintiffs’ franchise agreements worthless. The government contends that plaintiffs’ but-for world allegations are either inconsistent with the Circuit’s holding or lack sufficient detail to meet the “plausibility” standard set by the Supreme Court in Ashcroft v. Iqbal, 556 U.S. 662 (2009).
Slip op. at 4.
Longer opinion, but worth reading in its entirety for you takings mavens, but the bottom line is that the CFC held the allegations were good enough in any of the three scenarios which were raised as possibilities. A good case to read in modern pleading and the Iqbal standard in regulatory takings cases.
Colonial Chevrolet Co., Inc. v. United States, No. 10-647C (Fed. Cl. Sep. 9, 2015)
