Seeking A Cause of Action
It has been just under a century since the U.S. Supreme Court first recognized (in the modern era, that is) the regulatory takings doctrine. You might think that the intervening decades would be enough time to allow the Justices, collectively, to have figured out what a cause of action looks like. You know, just enough to get by a motion to dismiss for failure to state a claim under Rule 12(b)(6).
Unfortunately, yesterday's oral arguments in Knick v. Township of Scott, No. 17-647 (transcript here, and below), would not confirm that belief.
Our major impression from the argument is that no more than three Justices clearly understand the major difference between an affirmative exercise of the eminent domain power to take private property, and an inverse condemnation action in which a property owner asserts that the exercise of a power other than eminent domain has the same effect on the property owner as an affirmative taking. (Justices Alito, Gorsuch, and (very likely Thomas, since he was, as usual, Silent Cal)), are the three, by the way.) The remainder of Their Lordships are either firmly in the apparently-don't-understand-inverse-condemnation camp (Justices Ginsburg, Breyer, Sotomayor), or are question marks at best (Justice Kagan and the Chief Justice).
If you are a takings nerd -- and why else would you follow this blog? -- please read the entire transcript. It will take you substantially less time than observing the arguments in person (as we did, along with our William and Mary Law class above, with Ms. Knick and the Pacific Legal Foundation Knick SCOTUS team, lead by Dave Breemer), or listening to the recording which should be available by the end of the week.
Advocacy Gold Standard
As an initial matter, the advocates were all very, very good, in our opinion. The Gold Standard in appellate advocacy, and one of the reasons our class made it a point to undertake the six-hour road trip from Williamsburg. We were not disappointed.
There's no one better on the planet than Dave Breemer to have argued this issue for Ms. Knick. He's studied the Williamson County ripeness issue for decades, and has argued (and won) many of the lower court decisions questioning that case's ripeness rules.
Noel Francisco, the Solicitor General himself, argued for the federal government in support of overruling Williamson County. He appeared (rather than one of the deputies or assistant SGs), in our view most likely precisely because the feds are asking the Court to overrule a case, a request that is not done lightly. Plus, it was the SG's brief in Williamson County which first raised the "ripeness" argument, something neither of the parties had done. If the SG's brief in Knick was now going back on that theory, the SG himself should show up to make the case and explain why. You don't send your assistant to offer mea culpas if needed.
Finally, Teresa Sachs, the lawyer arguing for the Township was also very solid, despite some withering questioning from a couple of the Justices. It's tough to hold your ground when Justices Alito and Gorsuch are lobbing logical grenades in your direction but she handled it coolly, and very well, we think, even though we obviously disagree with her arguments.
"...Without Just Compensation?"
Mr. Breemer started off his argument on the exactly right note, wasting no time, cutting right to the heart of the issue:
Requiring Ms. Knick to prosecute her federal takings claim in state court conflicts with Section 1983 and is incompatible with the nature of her claim. Her claim is not based on the government's failure to compensate. It's based on the township's failure to recognize that the imposition of an access easement is a Fifth Amendment taking that triggers a compensation requirement.Because lack of compensation is not an element of her federal takings claim, state compensation remedies do not bear on the presentation of the claim in federal court.Tr at 1.
Chief Justice Roberts questioned why compensation isn't an element of Ms. Knick's takings claim. After all, the Fifth Amendment does say that "private property ... blah blah blah ... without just compensation." The main theory of Williamson County was that the federal constitutional claim is based on the denial of compensation, and thus isn't even ready for federal adjudication unless and until the state or municipality has not only told the owner they aren't getting compensation, but also after the owner sues for a taking and compensation in the context of a state court/state law inverse condemnation claim brought by the plaintiff property owner, and loses. Only then, so the theory goes, is the Fifth Amendment claim ready.
We think that resulted in the Chief's question to Mr. Breemer:
CHIEF JUSTICE ROBERTS: Well, I thought that was the whole point of an inverse condemnation. They recognize that they owe her money, and the whole point of the process, which can be fairly elaborate, is that they're just trying to figure out how much. If it's not enough, then she can bring a claim.
Tr. at 4.
Wait, what?
No, no, no. The whole point of an inverse condemnation or regulatory takings case is that they don't "recognize that they owe her money." Indeed, they are denying they owe her anything. It's the owner -- the defendant in an eminent domain case -- who is forced to bear the cost and effort of being a plaintiff and sue the government, precisely because "they" have refused to pay compensation because they do not recognize any liability. We're not exercising our eminent domain power, we're merely regulating under our police or other powers; we haven't taken anything. Thus, a plaintiff has two major burdens in an inverse case in most jurisdictions: as a threshold matter, she must prove liability (that the government has taken the property), and if so, only then is she allowed to prove the amount of compensation owed.
In an eminent domain case, by contrast, the property owner is the defendant and the government admits it owes compensation. It often argues for lower compensation than the property owner thinks their property is worth, but the owner does not have any burden to prove the government's liability to pay.
Thus, in eminent domain actions, the owners' right to compensation vests if and when the government condemns property -- either by quick take and possession, or in a straight-take after a judgment of condemnation and the payment of compensation and damages. This is why, as several of the Justices recognized yesterday, the condemnor is obligated to pay what looks like interest on a condemnation judgment that is not paid at the same time of taking or possession. [Barista's note: the time value of money for the delay in payment of compensation is really not "interest," but is built into the Fifth Amendment's requirement that Just Compensation must represent the "full and perfect equivalent" of the property taken. Thus, a state's statutory prejudgment interest rate may not be sufficient, and an owner should be allowed to prove a higher rate if the market reflects a higher rate.]
That the right to compensation vests upon an affirmative taking is why quick-take is constitutional, and the reasoning behind the line of cases which form the core of the Township's argument which hold that there's no obligation under the Takings Clause for the condemnor to pay compensation contemporaneous with the taking as long as there is an available and reasonably certain method for calculating that compensation. The delay in compensation is only constitutional under the Fifth Amendment, we think, because the right to compensation vests. Which turns on when there's an acknowledgement there's been a taking.
In eminent domain it's easy to establish when the acknowledgement of the taking occurs and the right to compensation vests: the government admits it at the start. But the Township's regulation of Ms. Knick's land and the loss of her property right to exclude isn't a quick take; heck, its not even a slow-take in the eyes of the government. Because the Township has not yet admitted that a taking has occurred, and because the Township has not recognized any obligation to pay compensation, the taking won't be established until the court concludes it is.
In short, the "vibe" of an inverse condemnation case isn't the same as a quick-take eminent domain case, as several of the Justices seem to assume.
This confusion resulted in a very odd exchange between the Chief Justice and Ms. Sachs, which totally confounds the dispositive difference between eminent domain and inverse condemnation:
CHIEF JUSTICE ROBERTS: You -- you agree -- you agree that the compensation that is due runs from the moment of the taking? In other words, if it takes you six months to adjudicate the -- the claim and you say, well, this is how much you owe, you owe interest going all the way back to the point at which the property was taken, correct?MS. SACHS: Well, yes, this Court has certainly -- the -- that -- the -- the fact that in the interest begins to run is another reason why the time is --CHIEF JUSTICE ROBERTS: And it must be --MS. SACHS: -- the time to pursue the inverse condemnation action, means that there has not been any deprivation of a constitutional right in the interim. [Barista's note: say what?]CHIEF JUSTICE ROBERTS: Well, it turns out there was a violation of the constitutional right at the moment of the taking, right? That's the whole point of interest.MS. SACHS: No. {Barista's note: say what?]CHIEF JUSTICE ROBERTS: Why, if there hasn't been a violation, why do you owe interest --MS. SACHS: That just --CHIEF JUSTICE ROBERTS: -- from the moment of the taking?MS. SACHS: -- because it's a -- the -- the post-deprivation process has been determined to be appropriate here, as well as in other situations, because there -- there's a circumstance, particularly a regulatory circumstance, where it's impossible to determine in advance, given the, as this Court has said, the myriad ways that regulations can affect property and whether or not any of them will ultimately end up being considered to be a taking.
Tr. at 35-37.
We think counsel was wrong when she argued that that "the post-deprivation process has been determined to be appropriate here." No, the post-deprivation remedy is only appropriate when an owner's right to compensation vests at the time of the taking. If the government contests whether a taking has occurred, as it did here and in most regulatory takings and inverse cases, the federal issues is whether there's been a taking, not whether they have paid compensation.
That, we think, is the critical issue the majority of the Court missed yesterday, and the biggest problem we saw in the arguments: most of the Justices seem to assume that an eminent domain case is the same as an inverse condemnation case, and the only real issue in inverse is calculating compensation. Thus, like in eminent domain only upon denial of compensation by a state court does the federal issue become ripe.
Not so. What Ms. Knick is seeking in federal court is vindication of her federal constitutional right to make the Township admit it has taken her property (and that it hasn't paid at the same time). And that is, in our view, squarely a federal right arising under the Fifth and Fourteenth Amendments, and a matter well within the original jurisdiction of the federal courts. For a recent example of this analysis, see the opinion of the Nevada Supreme Court in Clark County v. HQ Metro, LLC, No. 71877 (Aug. 2, 2018), in which the court resolved when a taking occurs. That is the same issue Ms. Knick was resolved in federal court. Only after resolution of that federal issue does her right to recover compensation vest. Until that second step, there's no vested right to compensation under Pennsylvania law that a Pennsylvania court could enforce.
Thus, the analogy of inverse condemnation to eminent domain is incomplete, and most of the Justices spent the majority of the hour comparing oranges to tangerines when they assumed that eminent domain and inverse condemnation are the same thing. Although there's a lot of similarities, they are not completely the same.
"Yes or no?
Justices Alito and Gorsuch get it, we think, as reflected by the colloquy with the Township's counsel which immediately followed the quoted part above, in which Justice Alito asked her whether the Township owed Ms. Knick any compensation:
JUSTICE ALITO: Does the township owe Ms. Knick any money, any compensation?MS. SACHS: That has yet to be determined, Your Honor.JUSTICE ALITO: You can't -- well, have you made any -- you don't know whether you owe her any money?MS. SACHS: The reason that --JUSTICE ALITO: Are you going to go back to your office and -- and think about that, and then send her a letter saying whether you owe her any money? If she does absolutely nothing, what will you do?MS. SACHS: Your Honor, what she is supposed to do in -- in this situation to find out the answer to Your Honor's question is pursue the Pennsylvania procedure that has been in effect for some 300 years.JUSTICE ALITO: You can't tell me whether you owe her any money?MS. SACHS: The state has to tell her whether we owe her any money, Your Honor.JUSTICE ALITO: You are the state. You represent the township. The township is part of the state. So what is before us here is the Commonwealth of Pennsylvania. Does the township owe her any money? Yes or no. I don't see how you cannot have an answer to that question.
Tr. at 36-38.
The reason counsel didn't want to answer Justice Alito was that she understood she could not say "yes" (that wasn't accurate), and if she said "no," he would spring the trap and point to her denial as the failure of the "without just compensation" provision in the Fifth Amendment.
Sure enough:
MS. SACHS: Your Honor, I cannot -- I can't have an answer to that question because that is why inverse condemnation exists. That's why the proceeding, as you recall -- [Barista's note: that's our point, above.]JUSTICE ALITO: All right. If she files an inverse condemnation proceeding, are you going to -- are you going to confess that you owe her money, at the outset?MS. SACHS: The first step in a Pennsylvania inverse condemnation proceeding would not involve that. The first question is for the court. The court determines in an inverse condemnation proceeding whether there has been a taking. We as the township --JUSTICE ALITO: What will your position be?JUSTICE BREYER: His point is that --JUSTICE ALITO: What will your position be?JUSTICE BREYER: That's right.MS. SACHS: What would the position be?JUSTICE ALITO: Yes, what will the position of the township be?MS. SACHS: In this particular case, I think the township would say there has been no taking. [Barista's note: BINGO, trap sprung.]JUSTICE ALITO: Therefore, if you have taken her property, you have taken her property and you have denied her compensation. Why is that not a violation of the takings clause? It is a taking without compensation.MS. SACHS: Because we do not agree that we have taken anything, Your Honor.
Tr. at 38-39.
If there was one critical colloquy, we think this was it.
Justice Gorsuch also nailed it:
JUSTICE GORSUCH: -- I think this gets back to Justice Breyer's question a little bit, which is you could say that the violation is complete upon the taking of the property with the denial of compensation, as Justice Alito just alluded to, and you've just denied that any compensation is due.Or you could say it should wait until a state litigation process has exhausted itself. And maybe it makes sense to wait when the state has acknowledged a duty to pay, and we can say the state's probably good for it. And that's where those cases originally came from, Cherokee and some of the early ones.But maybe -- maybe it doesn't make sense when the state has denied any obligation to pay. Maybe -- maybe it makes -- maybe it is different when it's an inverse condemnation, because when we look at other -- other constitutional rights, we don't say that a First Amendment violation isn't complete until someone has litigated that claim in state court under state processes or a Fourth Amendment claim.And when you look at the history of inverse condemnation suits, they originated in common law under trespass. It's a simple claim against the state for trespass. That's what an inverse condemnation suit is. Nothing more, nothing less.So why should we single out the --this particular right, the takings clause, for such disfavored treatment to wait to exhaust state remedies that wind up in this ripeness world to yield a moot federal claim?
Tr. at 40-42.
"Let Sleeping Dogs Lie"
Surely the oddest moment of the morning was Justice Breyer's pointing to stare decisis as the reason to not overrule Williamson County, as screwed up as it may be:
JUSTICE BREYER: You don't have to -- the problem -- the problem -- I mean, you could say what Justice Gorsuch said, couldn't you? The state says: No, we're not going to pay you. Ha, because there's no compensation -there's no taking. Ha.And we could say that's a final decision not to take it. We could. I mean, I don't see any logic. But Williamson didn't. So I thought: Well, why let the sleeping dog -- let it lie?
Tr. at 44-45. Yes, Williamson County has been around 30 years, but the property bar bitched about the ripeness rule in that case even before the ink was dry. It ain't exactly Marbury, Your Honor. And wrong is wrong, right? Not wanting to overturn a case that was wrong the day it was decided -- and allowing the injustice to perpetuate -- seems like folly.
So what's the score?
Justice Breyer hit on the two issues we see the Court reaching a consensus on:
[JUSTICE BREYER:] And -- and then one thing, however, they have a good point and what do you think of that? Their point is there's surely no reason for the defendant in the state case, where you can do so, remove it to federal court, and then, once he's in federal court, they won't decide it because it wasn't in state court. You agree that we should -- no matter what we do, we should write a sentence which says that's wrong?MS. SACHS: Yes, Your Honor.
Tr. at 45. He's referring of course to the removal procedure approved by the Cour tin Chicago Surgeons -- under which a property owner cannot file a takings claim in federal court, but a state or municipal defendant can remove a takings claim to federal court on the basis of federal "arising under" jurisdiction -- is solidly on the chopping block. We predict at least eight Justices are on board with jettisoning that part of the case, and restoring some balance to the equation. If property owner plaintiffs can't bring federal takings claims in federal court, neither should regulator defendants.
We also think that at least eight Justices may be open to dumping San Remo's preclusion/Full Faith and Credit trap. See Tr. at 43 (Justice Kagan).
Beyond that, we didn't see any obvious consensus among the Justices for overruling the Williamson County state procedures requirement. As we noted at the start of this post and it the section above, three Justices should be on board with overruling (Justices Thomas, Alito, and Gorsuch). And four Justices would probably be okay with leaving it in place and jettisoning Chicago and San Remo (Justices Ginsburg, Breyer, Sotomayor, and Kagan). If anyone has doubts about how Justice Kagan sees this, check out page 43 of the Transcript: "Ms. Sachs, I -- I think you have a pretty good argument that there's no Fifth Amendment violation until both the taking has been accomplished and there's been a denial of just compensation."
And even assuming Chief Justice Roberts were to agree with Justices Thomas, Alito, and Gorsuch -- an assumption we are not highly confident of, given the Chief's questions about the nature of inverse condemnation -- unfortunately we can't agree with Professor Somin, who wrote that Justice Kagan might be the fifth vote in his summary of the arguments, "Thoughts on Today's Supreme Court Oral Argument in Knick v. Township of Scott - A Crucial Property Rights Case" ("On this key point, Justice Elena Kagan appeared to agree with the conservatives...").
Which leaves us the prospect of a 4-4 split at best, which could mean affirmance, a horrible way to end this case. We don't know enough about the internal workings of the Court -- remember, we were with the back row kids in law school -- to know whether the Court could or would reschedule argument once that critical ninth seat is filled. Doing so would certainly be preferable to the Third Circuit being affirmed by an equally divided Court.
For more argument detail (in addition to Prof. Somin's post above), see "Argument analysis: Weighing federal court access for local takings plaintiffs" from SCOTUSblog.
Finally, our hope in Knick is as it is in all takings cases that make their way up to the Supreme Court: that whatever the Justices do in the case, they don't screw up takings law any more than it already is. And that is independent of who wins. You just have to look at Murr v. Wisconsin for an example of a government win that is analytically goofy, and Arkansas Game and Fish Comm'n v. United States for a property owner win whose analysis is equally off.
The biggest problem is that the Justices seem to not understand eminent domain law fundamentals. Lacking that analytical foundation, they end up operating under a set of often-wrong assumptions, assuming that the inverse condemnation and regulatory takings oranges are like the eminent domain tangerines.
We think the arguments in Knick highlighted just that.
Transcript, Knick v. Township of Scott, No. 17-647 (U.S. Oct. 3, 2018)
