Here's the latest complaint challenging a governmental business shut-down order. In this case, it is an order by the Michigan governor. We've seen similar lawsuits recently (see here, here and here, for example). So far, these complaints have have not met with receptive audiences. This one was tossed aside quickly. This one resulted in an opinion, but also lost.
But unlike the other complaints, this latest one puts the takings argument front and center and lays out, in great detail, the theory behind the argument. It reads more like a brief (or maybe a press release) than the typical "short and plain statement" complaint.
Does that mean we think it has any better chance than other efforts? No, for the same reasons that so far, we haven't seen a takings claim that jumps out to us as one highly likely to get traction. Doesn't mean the claims are not good, just that in regular times, these type of takings claims are tough; more so during a time when courts are not exactly eager to entertain challenges to governmental exercises of power that restrict property and liberty.
But whatever the outcome, we suggest you read the complaint. It sets out the theory of takings clearly, in our view. Start with paragraph 45, the first takings mention.
45. 2020-21 and 2020-42 constitute a regulatory taking implemented for a recognized public purpose, and therefore the failure to pay just compensation contravenes the Takings Clause of the Fifth and Fourteenth Amendments. Coalition for Gov't Procurement v. Fed. Prison Indus., 365 F.3d 435, 478, (2004) see also Horne v. Dep't of Agric., 576 U.S. 350, 135 S. Ct. 2419, 2426 (2015) (“Nothing in the text or history of the Takings Clause, or our precedents, suggests that the rule is any different when it comes to appropriation of personal property. The Government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home.”).
Complaint at 7-8.
Then, move on to five detailed pages of takings doctrine. The key allegations are paragraphs 69 (acknowledging that the shut-downs orders are for a valid public purpose and the taking is "for public use," correctly highlighting that the takings remedy being sought is just compensation, not an injunction), 77 through 85 (alleging the Lucas wipeout of all economically beneficial uses of plaintiffs' property), and 90 (alternatively, if the owners' use isn't totally wiped out, then under Penn Central there's still a taking).
Like many of these things, the big initial question is factual: whether this case is in Lucasland or PennCentralville. Do the shut-down orders really deprive the owner of all economically-beneficial uses?
67. Governor Whitmer has seized without compensation the property of businesses and individuals across the State, by forcing the closures of business and restricting travel to second homes and vacation properties under 2020-21 and 2020-42.68. These uncompensated seizures violate the Takings Clause of the Fifth Amendment, made applicable to States through the Fourteenth Amendment, and also violate well-established notions of Substantive and Procedural Due Process. Plaintiffs respectfully request that this Court (i) declare the Governor Whitmer’s actions unconstitutional, and (ii) order the payment of just compensation.69. Governor Whitmer issued a series of Executive Orders for the public purpose of protecting Michigan’s public health, safety and welfare.70. Governor Whitmer has placed the cost of these Orders – issued for the benefit of the public – squarely upon the shoulders of private individuals and their families and has failed to justly compensate affected parties for these takings undertaken for their benefit to the public.71. Without extending constitutionally required just compensation to Plaintiffs, these Orders jeopardize the sustainability of Plaintiff’s businesses and the rights of the Plaintiff’s rights with respect to property ownership.72. The Takings Clause of the Fifth Amendment provides that private property shall not “be taken for public use, without just compensation.” U.S. Const. Amend. V.73. The Takings Clause “is designed not to limit the governmental interference with property rights per se, but rather to secure compensation in the event of otherwise proper interference amounting to a taking.” Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 536–37 (2005) (quoting First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 315 (1987) (emphasis in original)).74. The Takings Clause bars government actors “from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Armstrong v. United States, 364 U.S. 40, 49 (1960).75. Governor Whitmer, issued 2020-21 and 2020-42 as a means of slowing the spread of the novel coronavirus.76. Governor Whitmer acted under color of state law, and 2020-21 and 2020-42 were issued to serve a well-recognized public purpose by a duly elected state official and his designee.77. 2020-21 and 2020-42 adversely impacted CONTENDER’S TREE AND LAWN SPECIALISTS, INC. and the LACKOMARS’ use of their Tangible Property and Physical Locations to such an extent that, at least temporarily, the Orders entirely diminished the economically beneficial use of those Properties.78. Under 2020-21 and 2020-42 all economically beneficial and profitable uses of CONTENDER’S TREE AND LAWN SPECIALISTS, INC. Tangible Property and Physical Location and the benefit of the LACKOMARS owning their Property; save bare ownership, the entire bundle of property rights was extinguished.79. 2020-21 and 2020-42 requires Physical Locations housing “non-critical infrastructure” businesses, or those used as second homes or vacation homes to remain idle.80. 2020-42 also prohibits the affected Physical Locations from being leased, subleased, bought, sold or used for other purposes.81. The Supreme Court “recognized that government regulation of private property may, in some instances, be so onerous that its effect is tantamount to a direct appropriation or ouster—and that such ‘regulatory takings’ may be compensable under the Fifth Amendment.” Lingle, 544 U.S. at 537.82. “The general rule at least is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.” Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415–16 (1922).83. Governor Whitmer’s executive Orders “go too far” and must “be recognized as a taking.” See id.84. Otherwise, without just compensation guaranteed by the Takings Clause, CONTENDER’S TREE AND LAWN SPECIALISTS, INC., and the LACKOMARS will be privately saddled with the cost of paying for government action undertaken for the common good.85. CONTENDER’S TREE AND LAWN SPECIALISTS, INC., and the LACKOMARS have suffered a complete loss of “all economically beneficial uses” of their Property while 2020-42 remains in effect. This complete loss constitutes a categorical taking, whether it be CONTENDER’S TREE AND LAWN SPECIALISTS, INC. and the LACKOMARS inability to operate their businesses at their Physical Locations or their inability to exercise any of their other property rights with regard to their Tangible Property. See Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1019 (1992).86. CONTENDER’S TREE AND LAWN SPECIALISTS, INC. and the LACKOMARS have been called upon to sacrifice all usage of their Properties in the name of the common good, that is, to leave their properties economically and otherwise idle, and for this, they have suffered a taking. Lucas, 505 U.S. at 1019.87. In the alternative, under the framework articulated by the Supreme Court in Penn Central, 2020-42 constitutes a taking based upon “the magnitude of [the Orders’] economic impact and the degree to which [the Orders] interfere[] with legitimate property interests.” Lingle, 544 U.S. 528 at 540.88. The Supreme Court’s analysis in Penn Central sets forth the framework for assessing whether government action is considered a regulatory taking, identifying “several factors that have particular significance.” Penn Central Transp. Co. v. New York City, 438 U.S. 104, 124 (1978).89. The court looks to three factors when analyzing a taking: (1) “[t]he economic impact of the regulation on the claimant,” (2) “the extent to which the regulation has interfered with distinct investment-backed expectations,” and (3) “the character of the governmental action,” Penn Cent., 438 U.S. at 124, 98 S.Ct. 2646. While these factors provide “important guideposts,” “[t]he Takings Clause requires careful examination and weighing of all the relevant circumstances.” Palazzolo, 533 U.S. at 634, 636, 121 S.Ct. 2448 (O'Connor, J., concurring); see also Tahoe–Sierra, 535 U.S. at 321, 122 S.Ct. 1465 (whether a taking has occurred “depends upon the particular circumstances of the case”); Yee v. City of Escondido, 503 U.S. 519, 523, 112 S.Ct. 1522, 118 L.Ed.2d 153 (1992) (regulatory takings claims “entail[ ] complex factual assessments”). Lost Tree Vill. Corp. v. United States, 115 Fed. Cl. 219, 228 (2014) (emphasis added).90. Even if the regulation falls short of eliminating all economically beneficial use, a taking nonetheless may have occurred, Palazzolo v. Rhode Island, 533 U.S. 606 at 617, (2001).91. Since the onset of Governor Whitmer’s Orders, CONTENDER’S TREE AND LAWN SPECIALISTS, INC. and the LACKOMARS have not been permitted to use their Physical Locations to operate their businesses, nor have they been allowed to use their Tangible Property for any economically profitable use.92. 2020-21 and 2020-42 have either entirely drained Plaintiff’s Property of all economic value during their pendency, or have nearly done so; in either event, the diminution of value and government interference caused by these Orders is an unconstitutional taking without just compensation.
Complaint 10-15.
Now we wait and see.
Complaint, Martinko v. Whitmer, No. _____ (E.D. Mich. Apr. 13, 2020)
