Here's one we've been following since its inception, even before we joined the law firm that represents the property owner. (And because our Pacific Legal Foundation colleagues are repping the plaintiffs in this one, we won't be commenting in-depth.)
You may remember that in Gunderson v. Indiana, 90 N.E.3d 171 (Ind. 2018), the Indiana Supreme Court concluded that the public owns the land up to the ordinary high water mark on Lake Michigan, and had done so all the way back to statehood in 1816. Problem is, according to some lakefront property owners, "undisputed local, state, and federal acknowledgement over the years" was otherwise - the law said that lakefront land was was private, not public, down to the ordinary low water mark. Thus, the plaintiffs alleged, "the Gunderson judgment changed the law of the State of Indiana, as recognized by prior Indiana court precedent as well as federal, state, and local authorities."
The owners sued in federal court, seeking a declaratory judgment that the Indiana court's changing the public-private boundary from the low to the high water mark resulted in an uncompensated judicial taking. The complaint sought an injunction prohibiting state officials from enforcing the Gunderson ruling and the follow-on confirmation statute. The plaintiffs did not ask the federal court for compensation.
In Pavlock v. Holcomb, No. 21-1599 (May 25, 2022), the U.S. Court of Appeals for the Seventh Circuit affirmed the district court's dismissal. The district court dismissed on the pleadings because "the Owners’ claims are functionally equivalent to a quiet-title action, and so are barred by sovereign immunity[.]" Slip op. at 7 (citing Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261 (1997)).
The Seventh Circuit didn't quite take the same approach (even though it reached the same outcome). It first noted that after the Supreme Court's decision in Stop the Beach Renourishment, the lower courts have repeatedly dodged the judicial takings question (or what Justice Scalia labeled the "how much wood would a woodchuck chuck" issue):
no federal court of appeals has recognized this judicial-takings theory. What has occurred instead is avoidance: every circuit to consider the issue has expressly declined to decide whether judicial takings are cognizable. Instead, each court has assumed without deciding that if such a cause of action were to exist, the relevant test would be the one Justice Scalia suggested in his Stop the Beach plurality opinion: did some arm of the state declare that "what was once an established right of private property no longer exists"? 560 U.S. at 715. In each of the cases that have reached our sister circuits, the courts have held that the challenged state-court decision had not erased an established property right. Thus, even if there were a theoretical claim for a "judicial" taking, the plaintiffs failed.
Slip op. at 10-11.
And so it was to be here. The Seventh Circuit avoided even the theoretical issue by concluding that the plaintiffs didn't allege enough to show Article III standing because the complaint seeks, essentially, to be awarded title to the property the Indiana Supreme Court took away, but the defendants (Indiana officials tasked with enforcing the public-private boundary) do not "have the power to grant title to the Owners in the face of the Indiana Supreme Court's Gunderson decision[.]" Slip op. at 12. Thus, "[e]ven if we were to agree with the Owners, therefore, a judgment in their favor would be toothless."
There are a number of problems with this approach, not least of which is that we lack authority to overrule a state supreme court. But the straightforward point is that none of the state defendants the Owners have named—not the Governor, not the Attorney General, not the Indiana Department of Natural Resources, and not the State Land Office—has the power to confer title on the Owners to land that Indiana’s highest court says belong to the state. No injunction we enter can fix that problem.
Slip op. at 12-13. The owners could have sued for compensation, but they couldn't have sued the State of Indiana for compensation in federal court under the Eleventh Amendment.. Slip op. at 13 ("Recognizing these hurdles, the Owners seek only equitable and declaratory relief.").
The court viewed the issue as one of title (who owns the lakefront land between the low and high water marks?), and thus distinguished the case from Cedar Point Nursery, where the issue was not title, but whether the state's regulations deprived the owner of their rights related to "property that they indisputably owned." Slip op. at 15. [Barista's comment: true, but wasn't the issue in Cedar Point Nursery whether the right to exclude was part of the owners' title?]
Same lack-of-standing result regarding causation. If anyone injured the plaintiffs according to the Seventh Circuit, it was the the Indiana Supreme Court ("an independent actor") which did so when it changed the law, and the named defendants have not done anything to cause further injury. Slip op. at 16 ("The Owners' injury is therefore traceable not to the state defendants, but to the independent actions of the Indiana Supreme Court."). [Barista's note: is the Seventh Circuit is suggesting that the Indiana Supreme Court or its members are the only proper parties in a judicial takings case?]
The Seventh Circuit also adopted a form of Rooker-Feldman lite. It concluded that "federalism and comity concerns" mean that federal courts should "proceed cautiously" when a plaintiff claims a judicial taking by a state supreme court, even though it is clear that Rooker-Feldman does not apply. See slip op. at 17 ("We recognized, in this connection, that the Rooker-Feldman doctrine does not apply here, because the Owners were not parties to the Gunderson litigation.").
Nonetheless, that doctrine’s animating federalism values counsel us to proceed cautiously when a novel legal theory raises the specter of a lower federal court reviewing the merits of a state supreme court’s decision.
Id. That "[n]onetheless" is carrying a lot of water here, because "proceeding cautiously" results in dismissing the case, the very same result as a Rooker-Feldman analysis.
Alternatively, the Seventh Circuit determined that ownership of the lakefront land between the high and low water marks was not "established" under Indiana property law, and thus even under the Scalia Stop the Beach plurality opinion, there's no judicial taking. The Seventh Circuit rejected the argument that prior to Gunderson that Indiana law clearly affirmed the lakefront owners' titles to the low water mark. Instead, the court concluded that Indiana law "had been ambiguous at best[,]" and that Gunderson settled the issue as one of first impression. Slip op. at 19. If Indiana law was not established prior to Gunderson, then the Indiana Supreme Court didn't change the law:
The Owners have not and could not show that the Indiana Supreme Court’s decision was a sharp or unexpected departure from a clearly established property right. Rather, the state court in Gunderson settled an unclear and disputed issue of first impression. The district court therefore noted that, even if it had jurisdiction over the case, it would have dismissed the Owners’ action for failure to state a claim under Rule 12(b)(6).
Because the Owners lack standing to sue the state defend-ants, we need not reach either the Coeur d’Alene issue or the alternative ruling under Rule 12(b)(6) today. We merely note that the Owners could not prevail without also overcoming these additional hurdles.
Id.
We set out our thoughts on the judicial takings question in this 2010 article - a bit older now, but, we think, still relevant.
Pavlock v. Holcomb, No. 21-1599 (7th Cir. May 25, 2022)