A Little Preview Of How Courts Are Going To Misapply Takings Analysis In Shutdown Cases - Federal Court: No Taking For Outlawing Dog Racing

What do you think of when you think of south Florida? Beaches? Jai Alai? Cuba Libre? Crockett and Tubbs and a career in southern law enforcement? 

Well, it better not be dog racing. Because by an amendment to the Florida Constitution (Amendment 13), the people of Florida banned it. Well, wagering on dog racing, technically. You can, apparently, still race dogs just for dog s**t and giggles.

Well, after the ban, the inevitable takings claim arrived, like the tail wagging the dog. In this Order, the U.S. District Court for the Northern District of Florida, dismissed the complaint for failure to state a claim. The court held the plaintiffs had standing, and the case was ripe and wasn't barred by the 11th Amendment for some of the defendants. 

But naturally, we focused on the takings analysis. First, the court agreed with the plaintiffs that they possessed a valid property interest under Florida law. So far so good for the commercial dog racers. But the second step is where, we think, the court went off track so to speak. The court concluded that outlawing dog racing was a valid exercise of the state's police power. "It is well-settled that there is no taking for 'public use' where the government acts pursuant to its police power." Slip op. at 29. And, "enactment of Amendment 13 represents a valid exercise of Florida’s police power and is therefore not a 'taking.'” Id. at 30. 

But wait, a takings claim doesn't challenge the public use or purpose of the government action does it? At least not when the remedy sought is compensation. So a determination that space aliens might have considered this a valid police power action for which the public benefits doesn't really solve the entire takings inquiry, does it? To us, that's more of a due processey argument than a compensation claim. 

Skip to page 35 for what we think is the more correct way to look at these type of claims (at least where there isn't a wipeout or Loretto invasion). The dreaded Penn Central test. Yeah, the test sucks. Yes, it seems that everyone but nine Supreme Court justices hate the test. But for now, it is the test, so we're gonna apply it because lower courts are applying it. 

But never fear, we also have a bit of a beef with the way the dog racing court applied the test, and the opinion illustrates the way lower courts have misunderstood the test, especially the "investment-backed expectations" factor. 

Here, Plaintiffs fail to plausibly allege that Amendment 13 interferes with their reasonable investment-backed expectations in their dog racing-related property. Plaintiffs allege the dog racing industry has been permitted in the state of Florida for nearly a century and they have “invested money in training, transporting, breeding, and racing greyhounds.” But, as Plaintiffs themselves affirm, dog racing in Florida is a highly regulated industry. Under these circumstances, Plaintiffs have not plausibly alleged that they had a reasonable expectation that their dog racing-related property would not be made economically worthless by a new law.

Slip op. at 35-37 (citations omitted). 

Note the court's use of "reasonable" investment-backed expectations, and not "distinct." Bill Wade has written about the change in terminology, and how that has resulted in courts messing up the Penn Central test, and this case is a good example and adds to the growing list of courts that look at the plaintiff's expectations that way. The fact that a use is "highly regulated" doesn't to us seem like it should be dispositive at all. After all, isn't all property (especially land use) highly regulated?

We'd think that 100 years of legality and state regulation and recognition of a use would lead to the conclusion that an owner's expectations that they could continue to make that use is pretty "distinct." See, e.g., Kaiser Aetna v. United States, 444 U.S. 164, 178 (1979) (Fifth Amendment protects more than mere expectancies, but if owner has made investment that "has the law in back of it," those expectancies must be compensated). 

So check out the order. We're not saying it reaches the wrong result. It might have, it might not have. We post it here because unfortunately, we think it illustrates well the way that many courts that are going to be dealing with takings claims arising out the shutdown orders are going to be analyzing these claims.  

Order Granting Defendants' Motion to Dismiss, Support Working Animals, Inc. v. Desantis, No. 4:19cv570 (N.D. Fla. Apr. 27, 2020)