Here's the unanimous Supreme Court opinion, issued this morning in a case we've been following, Town of Chester v. Laroe Estates, No. 16-605 (June 5, 2017), a takings case, although the issue resolved by the Court is one of civil procedure.
The Court's holding is remarkably unremarkable: a plaintiff -- including a plaintiff who intervenes in a lawsuit as of right under Fed. R. Civ. P. 24(a)(2) -- must have Article III standing. We say "unremarkable" because we never could quite figure out why that proposition was apparently so controversial that it ended up with a lower court split: doesn't every federal court plaintiff need to show that there's a live case and controversy on every claim and form of relief that is alleged? Yes, the parties didn't dispute it, and the Court, in the opinion authored by Justice Alito, reached that conclusion in the second sentence:
The parties do not dispute -- and we hold -- that such an intervenor must meet the requirements of Article III if the intervenor wishes to pursue relief not requested by a plaintiff.
Slip op. at 1.
Sherman asserted a regulatory takings case against the town in New York state court, the essence of which was that the Town denied him permission to develop a housing subdivision. The Town removed it to federal court. After a visit to the Second Circuit reversing dismissal of the claim, Sherman died, but his estate continued to litigate the takings claim. Laroe sought to intervene, and alleged that some time after the Town's denial of Sherman's efforts to build the project, he and Sherman entered into a deal, and as a result, (allegedly) now owns some kind of beneficial interest in the land the Town inversely condemned. Laroe asserted it was entitled to the same relief as the now-deceased Sherman, and Laroe's regulatory takings complaint "was substantively identical to Sherman's." Slip op. at 3. The relief sought by Laroe was "damages ... [and] compensation for the taking of Laroe's interest in the subject real property." Id. at 3-4.
The District Court rejected Laroe's motion to intervene in the case, concluding that that it was futile, because Laroe did not own a property interest that was taken because it wasn't the owner of the property at the time the town allegedly took it by overregulation. No property interest, no intervention. That was enough, held the District Court, and it didn't analyze the issue further under Rule 24, which governs intervention in federal court, and look at things like what interest Laroe was claiming (Fed. R. Civ. P. 24(a)(2)), or whether Laroe claimed common issues of law or fact (Fed. R. Civ. P. 25(b)(2)).
The Second Circuit (again) reversed, because in that court's view, standing and intervention are two separate things, and that an equitable interest in the land did not confer standing on Laroe. Standing goes to whether there is a live case and controversy for federal adjudication, while intervention is focused only on whether a third party has a place at the table and qualifies under the three-part test in the Rules. Here, Sherman's estate has standing, so whether there was a live case and controversy wasn't an issue, and the only question should have been whether Laroe met Rule 24's requirements.
The Supreme Court disagreed, concluding that the same standing principle which governs plaintiffs under Article III "applies to intervenors of right." Slip op. at 6. "In sum," the Court held, "an intervenor of right must have Article III standing in order to pursue relief that is different from that which is sought by a party with standing. That includes cases inwhich both the plaintifff and the intervenor seek separate money judgments in their own names." Slip op. at 6. The court held it is "unclear whether Laroe seeks the same relief as Sherman or instead seeks different relief, such as a money judgment against the Town in Laroe's own name." Slip op. at 7.
Laroe's complaint seeks a money judgment in favor of Laroe against the Town, while Sherman's complaint seeks a money judgment in favor of Sherman and against the Town. But the actual relief and claims are, admittedly, a bit muddy. In the lower courts, Laroe intimated that that his damages and Sherman's damages were the same: there was "one fund" (as Laroe labeled it), and the only thing the Town needed to do was "turn over the fund." But Laroe also suggested that it hadn't figured out yet whether there needed to be a separate award, or whether it was between Laroe and Sherman to "duke it out" (again, Laroe's words) for the proceeds (what the Supreme Court called "the allocation issue," Id. at 7-8).
Others have already analyzed the case from the viewpoint of civil procedure:
Though not exactly a revolution in the doctrine of standing, the decision does have important implications moving forward, most particularly in cases where “the plaintiff and the intervenor seek separate money judgments in their own names.” Id. at 6. Furthermore, Town of Chester narrows the scope of intervention rights in seven circuits that had held otherwise before this decision. And, at the very least, the clarification of Rule 24 should excite civil procedure nerds across the country.
A good analysis, and we won't undertake our own review of the case from that viewpoint.
But we do have some thoughts as takings lawyers:
- New York law requires "duking it out." First, there's no discussion of New York's takings law in the decision, particularly the undivided fee rule. That could have been relevant in our view because that rule -- which requires in situations like there that condemned property be valued as a single unit and not separately -- would seem to solve the question of whether Laroe could seek separate relief for the taking from the Town. We thought the answer was no, and that the Town would only be liable for just compensation for what ever was taken, and then Laroe and Sherman's estate would "duke it out."
- Standing vs. "Property." We see where the Court is coming from: every federal court plaintiff needs standing, whether they are an original plaintiff, or a plaintiff-in-intervention. With that we have no problem. But where we have difficulty is the application of the standing doctrine in takings cases that end up in federal court, where the Article III requirements kick in. Our view is that qualifying to intervene, followed by an application of Penn Central's "reasonable investment-backed expectations" test should obviate the need for what the District Court did below, which was look at this from the viewpoint of whether Laroe owned the allegedly taken property at the time in which Sherman claimed the Town overregulated it. The idea that the "property" analysis is somehow a separate one -- and yet another hurdle for takings plaintiffs to overcome -- is one that has always struck us as unnecessary. If you have standing and allege investment-backed expectations along with Penn Central's two other factors, that should be enough to make out a takings claim.
- Chicago Surgeons, and Williamson County: Sherman filed its takings claim in state court and the Town removed, highlighting the weird bifurcation that the Court has yet to resolve: Sherman could not have brought his regulatory takings claim in federal court under federal question jurisdiction, yet the Town can remove it there under (presumably) federal question jurisdiction without a peep from anyone.
- Bad Vehicles Make Good Law? Because of the above, we thought the case was not the best vehicle to address the civil procedure question. The fact that neither the parties, the amici, the Justices, nor their clerks really seem to have considered the takings-specific issues shows us that maybe takings cases should be left to the takings bar, and not to the SCOTUS "echo chamber" Bar who take up the majority of the Court's docket. But what do we know.
Two other recent cases involving standing and regulatory takings cases, which you might want to add to your reading list, one from the Texas Court of Appeals, the other from the Federal Circuit.
Town of Chester v. Laroe Estates, No. 16-605 (U.S. June 5, 2017)
