In Brady v. City of Myrtle Beach, No. 23-1847 (May 16, 2025), the U.S. Court of Appeals for the Fourth Circuit made short work of the takings claims brought by several business owners who claimed the city directly or indirectly shut them down because their businesses contributed to a rise in crime in the area.
Myrtle Beach's "Superblock," was one of those problem areas. As the Fourth Circuit put it:
In 2015 and 2016 alone, eleven people were shot in the Superblock. Dozens more were sexually assaulted, battered, or robbed. Because most of these crimes occurred in or around a small cluster of bars, the City increased its police presence in the area and began closely investigating the establishments for compliance with state and local safety regulations. Despite these measures, crime continued unabated.
Slip op. at 2.
Some of the details of those incidents:
The crime in the Superblock during this period was both frequent and severe. Between 2015 and 2016, eight individuals were shot in or just outside Pure Ultra, another was shot inside Natalia’s, and two more were shot in neighboring bars. In addition to the shootings, many other individuals were sexually assaulted, beaten, or robbed. In Pure Ultra, for example, one man was assaulted and broke his foot, an assailant used his girlfriend as a human shield to block taser fire from police, and an 18-year-old woman was raped inside the club. In Natalia’s, an employee sold drugs to customers, a patron punched a staff member in the face, and a DJ was arrested after police found a mason jar full of marijuana in plain view and a loaded firearm in his equipment bag.
Slip op. at 4.
Yikes.
After the city shut down two of the bars by revoking their licenses for "repeated legal violations" and a third bar closed without direct city intervention for lack of business, the businesses sued claiming, inter alia, a taking (they also claimed the crack down was racially motivated). The district court directed a verdict for the city on all claims.
The Fourth Circuit affirmed. It didn't reach the merits of the takings claim, instead concluding as a threshold matter that the bar owners did not allege and prove a private property interest that was subject to a taking. Here's the entirety of the court's rationale:
We start with whether appellants have a constitutionally protected property interest. Appellants assert that they have a protected property interest in “operating their businesses free from harassment, discrimination and selective enforcement.” Opening Br. at 25. But the Supreme Court has been clear that “the activity of doing business, or the activity of making a profit is not property.” Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 675 (1999).Nor do appellants have a protected property interest in their business licenses. Under South Carolina law, “an interest that depends totally upon regulatory licensing is not a property interest.” Mibbs, Inc. v. S.C. Dep’t of Revenue, 524 S.E.2d 626, 628 (S.C. 1999). That is consistent with traditional principles of property law. Since the days of the Early Republic, it has been well understood that an individual does not have a property interest in “mere ‘privileges’” which “belong[] to private people only so long as the legislature allowed them to exist.” Caleb Nelson, Vested Rights, “Franchises,” and the Separation of Powers, 169 U. Pa. L. Rev. 1429, 1433 (2021); see also, e.g., Brick Presbyterian Church v. City of N.Y., 5 Cow. 538 (1826); Metro. Bd. of Excise v. Barrie, 34 N.Y. 657 (1866); Bos. Beer Co. v. Massachusetts, 97 U.S. 25 (1877).Appellants do have a protected property interest in their leaseholds. But appellants do not argue that the City “took” their leasehold interests. Nor could they. There is no suggestion in the record that the City physically interfered with appellants’ right to possess their land pursuant to their leases. And it cannot be said that the City’s enforcement actions went “too far” with respect to the appellant’s ability to use their land. The “economic impact” of the enforced regulations is minimal, the “interference with reasonable investment-backed expectations” is nonexistent, and the “character of the government regulation” is ordinary. State laws from time immemorial have expected businesses to take basic measures to prevent crime on their premises. On top of that, the licensing laws enforced here only prevent appellants from using their land to operate a bar. That hardly “saps too much of the property's value” such that it must qualify as a “taking.” Sheetz v. Cnty. of El Dorado, 601 U.S. 267, 274 (2024).
Slip op. at 7-8 (footnote omitted).
Brady v. City of Myrtle Beach, No. 23-1874 (4th Cir. May 16, 2025)
