Stop Making Sense: Knick, Williamson County, And Lessons For Takings From The Dusky Gopher Frog Decision - Are "Takings" Federally Justiciable?

Our final 2018 post focused on what we thought was the biggest case of that year, and which, we're predicting, will be the biggest case of 2019: Knick v. Township of Scott, No. 17-647, that's the one in which the Supreme Court is considering whether federal takings claims can be brought in federal court, and whether to revisit the 30-year old Williamson County "state procedures" requirement. 

So we're kicking off 2019 with our thoughts on that case, coming up for reargument next week. 

Before we get to our prognostication (yes, we're going to go there, however futile doing so might be), we wanted to lay out our thinking on the issues so you can see how we got there. The wildly divergent positions taken by the three main players -- Ms. Knick, the Township, and the United States -- illustrate well how mucked up and opaque regulatory takings doctrine is: after nearly 100 years, the Supreme Court hasn't quite got around to defining the constitutional cause of action is in these cases.

Or has it?  

First Principles (or Would You Rather Win?)

Which leads us to a related topic: how do you argue an issue to the Supreme Court when the existing analysis is based on decades of built-up precedent (much of it confused, or simply bad), misinformation, judicial sleight-of-hand, and semantics? Do you go try to get the Court back to "first principles" and make an attempt to straighten out the intellectual mess, once and for all? Or do you play it as it lies, and look for a way to reconcile the existing precedent with a favorable result, with the hope of sorting out doctrinal damage in the future?

The first is a recipe for your ego writing checks your body can't cash (and a spectacular -- but principled -- defeat). And while the latter may be the more likely path to victory, it also countenances further screwing up the doctrine, and a deepening of the intellectual difficulties which made winning difficult in the first place. 

That's our sense of what is fueling the narrative disconnects that lie at the heart of Knick. Neither party nor the amicus federal government has much interest in asking the Court to go back and start all over again. Instead, each tries to harmonize the existing precedent with their theory. A wise move, no doubt.

But in trying to figure out what the Court might do, we're going to be looking at the issue of whether a property owner who alleges that a local government action violates the incorporated Fifth Amendment can raise that claim in a federal court in two ways: first, from the ground up - what should the law be? And then second, what's the way the Court's majority may treat this, given the existing law, and the questions from the Court the first time the case was argued back in October 2018.  

So for the moment, please put aside the tortured history of the regulatory takings doctrine, and let's go back to basics. 

Is the Problem A "Taking," or Only A "Taking Without Just Compensation?"

All the way back to 1922. That's when the Supreme Court recognized in Mahon that regulation could result in a taking (and yes, we know that this idea was certainly around before Mahon, but most people think that Mahon created the doctrine, and that's good enough for our purposes), and require the payment of compensation. The "storied but cryptic" formulation that while property "may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." Property owners, regulating entities (both federal and state), lawyers, judges, and legal scholars spent the next half-century-plus trying to figure out just what "a taking" is. 

After some false starts (Agins' "substantially advance" test, for example), the Court in 2005 in Lingle finally settled on what looked like a minimally-workable doctrine. A regulation will effect a taking if it has a similar impact on an owner's property rights as an affirmative exercise of eminent domain; the more a regulation looked like a condemnation, the more likely it would be deemed to be a taking requiring the payment of compensation. The more the regulation did what regulations do -- govern the use of property without actually depriving the owner of a fundamental attribute of ownership -- the more likely it would be deemed to be merely regulation.

Thus, a physical invasion of property (the most classic form of eminent domain) was always a taking (Kaiser, Loretto), as was a regulation that wiped out property's economic use (Lucas). But pretty much everything else would be judged on a sliding scale by measuring a series of "factors" to try and intuit whether the regulation or other government action really looks like an exercise of eminent domain (Penn Central). It certainly is not the best of theories. Lord knows, the Penn Central test has resulted in more judicial, practicing bar, and academic head-scratching and frustration over the decades, with only the Supreme Court itself seemingly confident of the meaning of each factor, and how to apply them. But at least it was something.

During this time, however, there wasn't a big effort put into effort trying to figure out whether a "taking" alone was actionable in federal court, or whether a taking was only of interest to the federal courts it a local government didn't provide compensation. This wasn't for lack of thinking about it, and in our view it was more the result of the remedy sought by the property owners in the key cases (Kaiser, Loretto, for example), or the procedural posture of the cases (First English, Agins), which resulted in the issue not being presented. 

Thus, during most of the time the above theory was being developed, there wasn't much of a question that when a local government (not the feds or a state government) was accused of perpetrating a regulatory taking, the plaintiff property owner could ask a federal court to determine whether there had been a "taking" requiring compensation. After all, the claim sure would seem to "arise under" the Fifth Amendment, which, since Chicago, Burlington, & Quincy Railroad v. City of Chicago, 166 U.S. 226 (1897), had been incorporated under the Fourteenth Amendment's Due Process Clause against local and state governments. Indeed, the private property clause in the Fifth Amendment was the very first part of the Bill of Rights which was selectively incorporated against the states by the Fourteenth Amendment.

On top of that, add the Anti-Ku Klux Klan Act (otherwise known as the Civil Rights Act of 1871, 42 U.S.C. § 1983), in which Congress created a private right of action for damages or equitable relief for persons whose "rights, privileges, or immunities, secured by the Constitution and laws" are "deprived" under "color of state law." Federal courts have jurisdiction over those claims, too. Thus, the Fifth Amendment as incorporated under the Fourteenth, along with section 1983, and the federal courts' jurisdiction-conferring statutes sure seemed to add up to a federal claim, enforceable in federal court. 

A "Reasonable, Certain, and Adequate" Means to Recover Post-Hoc Compensation

But 1985's Williamson County changed all that. Based mostly on the Solicitor General's argument that any allegation a municipality violated the incorporated Fifth Amendment by regulating property "too far" cannot arise before the municipality has denied compensation, the Court held that a property owner must, in effect, exhaust state compensation remedies before coming to federal court with their "takings" claim. 

The Court and the SG analogized the situation to those in which the federal government affirmatively takes property, but does not contemporaneously provide compensation. Thus, a violation of the Fifth Amendment does not arise when the federal government employs a "take now, pay later" scheme, provided there is a "reasonable, certain, and adequate" means for the property owner to recover compensation in the future (either by final judgment in the eminent domain action, or by raising a claim against the feds seeking compensation under the Tucker Act in the Court of Federal Claims or a district court), and you have a perfect recipe for keeping what sure look like federal constitutional claims out of federal court. See, e.g., Kirby Forest Industries, Inc. v. United States, 467 U.S. 1 (1984). 

In Williamson County, the Court concluded that a municipality's "denial" of compensation not only includes the municipality telling the property owner that it wasn't going to be paid squat for regulating the property (this is only a regulation, after all, and municipalities aren't in the habit of paying to regulate), but also includes the courts of the state telling the property owner that it wasn't going to be paid squat under a state-law inverse condemnation lawsuit to force the municipality to pay compensation. Thus, what we refer to as a "federal takings claim" against a municipality doesn't belong in federal court at all because even if there's been a taking, there's no constitutional problem yet if there's a chance the owner might recover compensation down the road from the municipality. 

Which brings us to where we are now. What follows is our attempt to reconcile taking principles (what should be) with the plain fact that current doctrine isn't consistent or comprehensive (what is). As we noted in an earlier post, the October 2018 arguments before an eight-Justice Court didn't give us a lot of confidence that a majority had a firm grasp on what the whole "takings" thing is about. Several Justices don't quite seem to understand the fundamental principles at play, nor the critical differences between an exercise of the eminent domain power, what it means to "take" property, and the nature of a state-law claim for "inverse condemnation." And the briefing from the parties often seems to be a case of talking about apples and oranges (especially the briefs of the Township and the SG). 

The Hill to Die On: "Take Now, Pay Later" 

The one issue that we think isn't going to be revisited substantially by the Court is the one motivating the SG's attempt to "retcon" its arguments (as we noted in this post). This is the notion that there's not been a "violation" of the incorporated Fifth Amendment if there's only been a taking, if there is a "reasonable, certain, and adequate" means for the property owner to obtain compensation after the fact. As the Court noted in Williamson County:

The Fifth Amendment does not proscribe the taking of property; it proscribes taking without just compensation. Hodel v. Virginia Surface Mining & Reclamation Assn., Inc., 452 U.S. at 452 U. S. 297, n. 40. Nor does the Fifth Amendment require that just compensation be paid in advance of, or contemporaneously with, the taking; all that is required is that a "reasonable, certain and adequate provision for obtaining compensation'" exist at the time of the taking. Regional Rail Reorganization Act Cases, 419 U. S. 102, 419 U. S. 124-125 (1974) (quoting Cherokee Nation v. Southern Kansas R. Co., 135 U. S. 641, 135 U. S. 659 (1890)). See also Ruckelshaus v. Monsanto Co., 467 U.S. at 467 U. S. 1016; Yearsley v. W. A. Ross Construction Co., 309 U. S. 18, 309 U. S. 21 (1940); Hurley v. Kincaid, 285 U. S. 95, 285 U. S. 104 (1932). If the government has provided an adequate process for obtaining compensation, and if resort to that process "yield[s] just compensation," then the property owner "has no claim against the Government" for a taking. Monsanto, 467 U.S. at 467 U. S. 1013, 467 U. S. 1018, n. 21. Thus, we have held that taking claims against the Federal Government are premature until the property owner has availed itself of the process provided by the Tucker Act, 28 U.S.C. § 1491. Monsanto, 467 U.S. at 467 U. S. 1016-1020.

Williamson County, 473 U.S. at 194-95.

This general principle isn't going to be revised in Knick because it insulates the federal government's quick-take power from challenge, and also validates the Tucker Act procedures for alleged regulatory takings and inverse condemnations by the federal government, and the SG (and the Court, no doubt) likes that situation just fine, thank you.

Which leads to our first question: is Kirby, or the decisions relied upon by the Williamson County court, perfect analogies when it is a local government -- and not the feds -- accused of the unconstitutional act? Not to us. 

First, Kirby involved the affirmative exercise of the eminent domain power. Thus, when the Court noted that "the Fifth Amendment does not forbid the Government to take land and pay for it later," the blanket rule should be limited to those situations where the government has acknowledged that it is taking property, and is as a consequence, willing to pay for it and the beef is just over how much. In federal quick-takings where the government takes now and pays later, title transfers immediately, which vests the owner's right to recover compensation. In situations where title does not transfer at the same time that a taking occurs and the owner's right to compensation vests, the "take now, pay later" rule should not be so casually applied. 

Second, in each of the cases noted in the above quote, it was the federal government that was alleged to have been doing the taking. Williamson County concluded, without citation, that the general principle from the noted cases holds true even where it is a local government doing the alleged taking: 

Similarly, if a State provides an adequate procedure for seeking just compensation, the property owner cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation.

Williamson County, 473 U.S. at 195 (emphasis added).

Are State Law Inverse Lawsuits The Same As Tucker Act Claims in the CFC?

Which leads us to our second question: are state-law inverse condemnation lawsuits in state court totally analogous to or Tucker Act claims in the Court of Federal Claims? We don't think so for two reasons. 

First, remember that what we call an "inverse condemnation lawsuit" against the federal government in the CFC is, in reality, an Article I proceeding to consider whether compensation is owed, and if so, how much. You don't get a lifetime appointed judge, or a jury. Thus, as a matter of first principles, the CFC isn't really a "court" at all. It's simply an Article I tribunal established by Congress to consider whether certain claims are meritorious enough to be compensated. In short, a CFC lawsuit is really a glorified administrative claims procedure. The Court's unanimous approach in Horne v. USDA, 569 U.S. 513 (2013), illustrates this, because it approved approved of the property owner raising (raisin!) a "takings-based defense" without first having sought compensation through a Tucker Act inverse claim in the CFC, by concluding that by adopting the raisin price control statute (which included an administrative claims process), Congress intended to withdraw the Tucker Act claim. There's no such municipal analogue in Ms. Knick's case. 

Second (and relatedly), the CFC Article I Congressional claims procedure is the federal government's own mechanism for processing these claims. It is Congress' way of saying "we think we're merely regulating your property, but if you think we owe you money, here's a way to make that claim." By contrast, a state-court inverse condemnation lawsuit against a municipality isn't really the same thing because it isn't an executive or legislative claims procedure set up by the municipality. It's just a plain old lawsuit. The state court isn't part of the local government's own compensation mechanism, and a state court isn't the local government refusing to pay, as noted by the Court in First English:

Williamson County Regional Planning Comm'n, is not to the contrary. There, we noted that "no constitutional violation occurs until just compensation has been denied." 473 U.S., at 194, n. 13. This statement, however, was addressed to the issue whether the constitutional claim was ripe for review and did not establish that compensation is unavailable for government activity occurring before compensation is actually denied. Though, as a matter of law, an illegitimate taking might not occur until the government refuses to pay, the interference that effects a taking might begin much earlier, and compensation is measured from that time. See Kirby Forest Industries, Inc. v. United States, 467 U.S. 1, 5 (1984) (Where Government physically occupies land without condemnation proceedings, "the owner has a right to bring an 'inverse condemnation' suit to recover the value of the land on the date of the intrusion by the Government"). (Emphasis added.)

First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 320-21 n.20 (1987) (emphasis added).

Stop Making Sense: Why Haven't State Courts Adopted Williamson County's Logic? 

Best illustrating this to us is the fact that we cannot locate a single state court decision determining that a state law inverse claim against a local government is unripe under Williamson County's rationale. Before you shake your head at what might appear to be illogical (how can a local government have taken property unconstitutionally without compensation under the state constitution, if the owner hasn't sued for compensation via the state's "reasonable, certain, and adequate" procedures for obtaining compensation?), please hear us out: you might think that a state court, considering whether a taking is "without just compensation" would be within Williamson County's logic to conclude that a state court inverse case isn't ripe because there are procedures for obtaining compensation, the state law inverse condemnation lawsuit itself. But that is an Escher-esque infinitely regressive loop, no?

Thus, state courts consider it okay to consider the question of whether property has been taken at the same time as the question of whether compensation has been owed, because they really are part and parcel the same question: the very process which determines there has been a taking is also the process which determines whether compensation is required. In other words, by bringing the claim for a taking, the property owner is ripening her claim for compensation. No state court has gone down a contrary logical path, yet the Court in Williamson County did so. 

Does that make any sense to you?

The Dusky Gopher Frog

That takes us to our final point in this post. Will a Supreme Court majority be willing to de-couple the "takings" question from the "compensation" issue? In other words, allow federal courts to consider both Fifth Amendment "takings" issues where the remedy sought isn't compensation (which they do now, see Kaiser Aetna, Nollan, and Horne, for example), and those cases where it is claimed that the local government hasn't provided compensation, and thus compensation is the remedy? 

After all, in the dusky gopher frog decision, the Court recently de-coupled the term "habitat" from "critical habitat," even though the latter phrase was a term of art, defined by statute. The unanimous Court concluded that "critical habitat" must include "habitat," even where Congress didn't include it.

Might the Court, under similar logic, be willing to revisit the concept that the action triggering federal jurisdiction for a section 1983 incorporated Fifth Amendment takings claim isn't limited to "takings without just compensation," but the "takings" issue generally? 

Prediction? Pain

And we can't leave without this: our prediction for what the Court is going to do.

We think there are going to be at least five votes for Ms. Knick. Now maybe that is wishful thinking on our part. But overall, we think she has the better arguments (and the support of the federal government, if not exactly for the same reasons). As long as the majority can preserve the general rule of "take now, pay later" and can otherwise thread the needle without having to overturn swaths of established takings doctrine (no matter how much of it doesn't make a lot of sense), we think the Justices will do so. 

We'll see. 

Programming note: we'll be in DC next week for a conference, and assuming that the Court is still open on Wednesday and hasn't been shut down, will attend the Knick rearguments. We'll bring you a report.