Yes, this is detail from the Supreme Court's front door.
This is the first in what will be a short series of five posts with thoughts on the landmark decision in Knick. In this installment, a crash course in the extensive doctrinal background necessary to understand why the Knick Court did what it did. Here are the related posts:
- Part II: The Court Finds A Vehicle In A Zombie-Zoning Case
- Part III: What It Means To "Take" Property Without Compensation
- Part IV: Why Not Let Sleeping Dogs Lie? The Dissent and Stare Decisis
- Part V: What's Next?
* * * *
The opinions in last week's ruling by a sharply-divided Supreme Court, Knick v. Township of Scott, No. 17-647 (June 21, 2019) employed a lot of very evocative language: "aborning," "Catch-22," "loot," "shaky," "sue me," "overthrows," "smashes," "smithereens" "first crack," "points for creativity." But ultimately, the most important word from the case was "overruled."
Takings
A federal regulatory takings claim, as you recall, is the idea which was first articulated in the modern era in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), that if a regulation goes "too far" in restricting the owner's use, it will be recognized as a taking which the Fifth and Fourteenth amendments mandate the payment of compensation. In other words, if a local government's regulation restricted a owner's use severely it was, from the owner's viewpoint, tantamount to an exercise of eminent domain. For more than 60 years, there wasn't a serious question that these claims could be asserted by property owners against local governments in federal court.
Two Ripeness Prerequisites: Finality and Exhaustion
But in 1985, in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), mostly out of nowhere the Court created two procedural prerequisites which owners had to show before their federal takings claims were considered ripe for federal court.
First, the regulating agency had to have made the final decision on what uses are allowed under the regulation. If the agency's process isn't complete, there's no way for a reviewing court to tell what uses of the property remain. This is known as the "final decision" requirement.
Second, the owner must not only have been denied compensation by the local government, she must also sue the local government in state court for inverse condemnation, to try and force it to pay compensation for the regulatory taking. In what become known as the "state-litigation" requirement, the Williamson County Court reasoned that the Fifth Amendment does not make a taking of property unconstitutional, only a taking without just compensation. Because the local government had not denied compensation until it lost the owner's state court lawsuit to recover compensation, the constitutional wrong does not occur until the state's supreme court rules for the government, making the taking "without just compensation." Only then was the case ripe for federal review.
If that sounds to you like convoluted logic and a stretch of constitutional text, you are not alone. Almost immediately after the Court issued the Williamson County opinion, commentators began to take apart the case's rationale. See, e.g., Michael M. Berger, Anarchy Reigns Supreme, 29 Wash. U. J. Urb. & Contemp. L. 39, 40 (1985) ("Williamson County] takes its place in the pantheon of indecision ... as demonstrating that those learned in the ways of the law can always find a way to duck an issue. With all due respect, the ... decision is both bad law and bad government.").
For the next three decades, the deconstruction by the bar and the legal academy continued unabated. Government lawyers had a very potent tool in their quiver, and legal scholars who supported the Williamson County state-procedures rule (or, more accurately, the limitations it placed on property owners' rights) searched for rationales to justify it (federalism, comity, and even textualism, for example).
Sua sponte
Much of the reason why the Court's analysis was so fallacious and subject to easy attack was that none of the parties in Williamson County had raised or briefed ripeness, and the Court had done it on its own. (Why we wrote above that the Court created the test "mostly out of nowhere.") The issue the parties were arguing about was whether a restriction on the use of property that is eventually lifted could be a temporary taking requiring compensation (an argument later resolved by the Court positively in First English).
The U.S. Solicitor General, however, as amicus curiae argued that federal courts could not even hear a federal claim for compensation (permanent, temporary, or otherwise) until the owner lost a state law inverse claim in her state's highest court or could show that the remedy was not available under state law. The Court latched on to that argument and adopted it as a wall around the federal court.
San Remo Catch-22
In theory, a property owner who had the dual luxuries of time and a thick wallet could do what the Court contemplated: after the local government's position was fixed (final decision), the owner could ask the government for compensation, be denied, and then sue the government in state court to force the government to pay compensation. When, presumably years later when the owner lost that claim, its federal claim ripened (the local government had finally taken the property "without just compensation," and the owner could then bring a complaint in federal court. But as a practical and procedural matter, owners never got anywhere and Williamson County amounted to a requirement for a plaintiff to exhaust state remedies, a requirement that no other federal civil rights plaintiff had to adhere to.
In San Remo Hotel v. City and County of San Francisco, 545 U.S. 323 (2005), the Court took Williamson County's flawed logic to its inevitable end. It endorsed a "you're either too early, or you're too late" theory that goes like this: the very process by which an owner ripened a federal takings claim (chasing and eventually losing an inverse condemnation lawsuit in state court), also meant that when the owner later asserted an appropriately ripened federal takings claim in federal court, that claim would be deemed precluded by res judicata. Because resolving your state inverse claim as Williamson County required meant that you had also thereby litigated your future unripe federal takings claim (even where you expressly tried not to -- no England reservations allowed!). And because a state court would consider a subsequent federal takings claim precluded by res judicata, so must the federal court as a matter of full faith and credit.
Confusing enough? The details were not that interesting except to federal courts nerds and takings junkies, but the short story was that if you tried to file a federal takings claim in federal court without losing first in state court you were too early under Williamson County. And if you followed Williamson County's rule and went through state process, you would be barred by res judicata when you finally were allowed in federal court. Joseph Heller could not have written it better.
The Catch-22 nature of this prompted four Justices to note in San Remo that the Williamson County experiment was due for another look. Chief Justice Rehnquist wrote:
Finally, Williamson County's state-litigation rule has created some real anomalies, justifying our revisiting the issue... I joined the opinion of the Court in Williamson County. But further reflection and experience lead me to think that the justifications for its state-litigation requirement are suspect, while its impact on takings plaintiffs is dramatic... In an appropriate case, I believe the Court should reconsider whether plaintiffs asserting a Fifth Amendment takings claim based on the final decision of a state or local government entity must first seek compensation in state courts.
The four concurring Justices, however, were not interested in San Remo of overruling Williamson County, simply because the property owners hadn't asked them to (that didn't stop them in Williamson County from adopting a rule sue sponte, so we're not sure what spurred the hesitation here).
Unequal removal
In 1997, the Supreme Court completed the ripeness hat trick. In City of Chicago v. International College of Surgeons, 522 U.S. 156 (1997), the Court allowed a governmental defendant to remove to federal court under federal question "arising under" jurisdiction a takings case brought in state court by the property owner (as Williamson County required it to do). How could it remove a case where the federal issue wasn't ripe? Who knows, the Court provided no answer.
This resulted in the asymmetry where a regulatory takings plaintiff could not bring the case in federal court, but the local government or state defendant could remove the state court case to federal court. And then, in some of the more extreme examples, some courts didn't blink when the defendant, which had removed the case to federal court sought dismissal of the takings claim because -- get this -- the case wasn't ripe because the state courts had not yet rejected the owner's claim for compensation. Several courts rejected this sleight-of-hand. Even sanctioning the government for playing that game. But many didn't.
Reverse percolation
As a result, for thirty-plus years, property owners, their lawyers, legal scholars, and the courts struggled. We educated state court judges on federal takings law, but the only hope of having a federal court actually consider a federal takings claim was the thin reed of SCOTUS certiorari review of a state court judgment. And that's a very thin reed.
Oh, there were some nibbling around the edges. Sensing the injustice of singling-out federal property claims for exclusion from federal courts, for example, some lower courts treated Williamson County's state-procedures ripeness rule as not jurisdictional, but merely a "prudential" requirement; a rule a federal court could overlook if it wanted to hear the case. Case-by-case federal jurisdiction isn't exactly the best circumstance to promote certainty, regularity, and predictability, though.
But a huge percentage of property owners who were not willing to pay their lawyers to contribute materials for Federal Courts treatises or otherwise endure years of pointless procedural wrangling declined to pursue their rights, or ended up throwing in the towel midstream.
One additional dynamic contributed to the chaos. As we noted above, Williamson County adopted the state-litigation rule without benefit of party briefing or argument, and without a developed body of scholarly work as foundation. In doing so, it reversed the usual process of getting an issue up to the Supremes. As we understand it, issues contentious enough to merits high court review are most often allowed (even required) to percolate for years in the lower courts and law journals, before the Court is ready to take them up. In Supreme Court litigation, it is often better to be a later case to present an issue, not the first. That way, the Court can consider the question presented after appropriate study by bench, academy, and bar.
The Court in Williamson County, however, switched the usual script: it adopted the state-litigation requirement on its own, and only then did we start to debate the rule's validity. And we spent the next 30-plus years doing so.
Only in Knick did the Court finally get full briefing of the issue.
Continued in Part II.
