The Sixth Circuit these days. Lots of property and takings-related stuff being decided in that court. See here, here, here, here, here, and here for some examples.
The latest is O'Connor v. Eubanks, No. 22-1780 (Oct. 6, 2023), in which an unsigned panel opinion (with concurrence of Judge Thapar in the result, but not in the reasoning), held that state officials sued in their individual capacities have qualified immunity from takings claims which seek just compensation. But are not similarly immune from procedural due process claims.
Short story: O'Connor was the payee on two checks that were delivered to his property. Apparently he got neither, so the payors turned the checks over to the State of Michigan, which treated them as unclaimed property.
Michigan's unclaimed property statute moves fast. It requires that the State, after first publishing notice, to sell or liquidate the property within 3 years if there's been no claim by an owner. The monies are deposited into the State's general fund, less admin costs. The owner can't then get the actual property back, but has a claim for the proceeds. The statute accounts for interest, "but only if their property accrued interest before the State took custody of it." Slip op. at 3.
O'Conner filed a claim to obtain the proceeds. The State paid him, but did not include interest. He claimed he is entitled to interest, and for the State to keep the interest is a taking requiring just compensation. O'Connor also claims the State did not provide his proper notice.
The Sixth Circuit summarily affirmed the dismissal of the takings claim because state officials sued in their official capacities have qualified immunity. The panel based its decision on recent circuit precedent (see this post for more on that). Here's the entirety of the opinion on that issue:
The Fifth Amendment’s Takings Clause provides that “private property” shall not “be taken for public use, without just compensation.” U.S. Const. amend. V. In his complaint, O’Connor alleges that the officials violated the Takings Clause. But under circuit precedent, Eubanks and Stanton are entitled to qualified immunity on these claims. See Sterling Hotels, LLC v. McKay, 71 F.4th 463, 468 (6th Cir. 2023). Earlier this year in Sterling Hotels, we held that individual liability for takings claims is not “clearly established.” Id. (“[N]o court in this circuit had yet decided whether an officer could be liable for a taking in his individual capacity . . . and at least one case suggested the contrary.”) (citing Vicory v. Walton, 730 F.2d 466, 467 (6th Cir. 1984)). Thus, we granted qualified immunity to an official sued in his individual capacity. Id. Because Eubanks and Stanton are also being sued in their individual capacities for takings claims, they are entitled to qualified immunity under Sterling Hotels.2--------2 O’Connor attempts to distinguish this case from Sterling Hotels, but the latter sets a clear rule: qualified immunity bars individual liability for takings claims under 42 U.S.C. § 1983.
Slip op. at 4.
O'Connor also raised a takings claim against the State of Michigan itself, but we know where this one headed: that's right, the Eleventh Amendment has been interpreted as prohibiting a state from being sued for money in federal court, unless the state consents or there is no remedy in state court.
Thus, the panel Williamson County-d it, and held that O'Connor could sue Michigan in Michigan's courts under the unclaimed property statute which recognized a claim for unclaimed funds. Thus, "a remedy is available in state court." Slip op. at 7/
By contrast, the Sixth has not previously decided the same issue in a due process claim, so the panel concluded that interest is "property," and that the complaint alleged that O'Connor was provided "no process" at all (an allegation the defendants did not deny (choosing instead to argue O'Connor has no right to process). Thus, the state officials sued in their individual capacities do not have qualified immunity. Slip op. at 6.
On to Judge Thapar's concurring opinion. We suggest you read the entire opinion, which begins on page 8. It's not long. His bottom line: the defendants here "are off the hook for O'Connor's takings claim [because of circuit precedent as noted above]. But in the future, our circuit can and should permit takings claims against officials." Slip op. at 8 (Thapar, concurring).
The concurring opinion focused on the history:
Thus, in the early decades of our republic, lawsuits against officials were a viable remedy for takings. Indeed, because states enjoyed sovereign immunity, suits against officials were among the only takings remedies for most of the nineteenth century.
Slip op. at 11 (Thapar, concurring).
Judge Thapar also recognized that the Catch-22 that property owners who have federal just compensation claims against a state find themselves in does look awfully familiar:
If that doesn’t give us enough reason to reconsider Vicory, its combined impact with DLX should. When a state official takes someone’s property without compensation, two obvious defendants come to mind: the official who committed the taking, and the state. Yet our precedent forecloses suits against either defendant in federal court. Vicory prevents claims against officials. And DLX bars claims against the state in federal court. Skatemore, Inc. v. Whitmer, 40 F.4th 727, 734 (6th Cir. 2022) (citing DLX, 381 F.3d at 526–28). Thus, unless there’s a municipality to sue, plaintiffs must litigate takings claims in state court.If this rule sounds familiar, that’s because it’s not new. It’s a version of the “state-litigation” rule. More importantly, it’s a rule the Supreme Court deemed “wrong” and “exceptionally ill” just four years ago. See Knick, 139 S. Ct. at 2178. In Knick, the Court rejected the idea that a plaintiff had no remedy in federal court until a state court denied him compensation. Id. at 2179. To hold otherwise, the Court noted, would “relegate[] the Takings Clause to the status of a poor relation among the provisions of the Bill of Rights.” Id. at 2169. Indeed, the Justices have repeatedly recognized that the state-litigation rule is “at odds with the plain text and original meaning of the Takings Clause.” Arrigoni Enterp. v. Town of Durham, 136 S. Ct. 1409, 1409 (2016) (Thomas, J., dissenting from denial of certiorari). So we should stop enforcing it.To be sure, our precedent doesn’t impose a state-litigation rule in so many words. But together, DLX and Vicory get us pretty close. Unless a municipality is available as a defendant—and as this case shows, that’s not always the case—plaintiffs are stuck litigating in state court. At best, plaintiffs can sue the state in federal court if remedies aren’t available in state court. See Skatemore, 40 F.4th at 734. But Knick expressly rejected that kind of arrangement: “The availability of any particular compensation remedy . . . under state law, cannot infringe or restrict” an owner’s right to pursue a remedy in federal court. 139 S. Ct. at 2171. The Supreme Court shattered the state-litigation rule in Knick. Our circuit shouldn’t piece it back together with Vicory and DLX.
Slip op. at 11-12 (Thapar, concurring).
Stay tuned.
O'Connor v. Eubanks, No. 22-1780 (6th Cir. Oct. 6, 2023) (per curiam)