Continuing Legal Education
Time to start brushing up on the Federal Rules of Civil Procedure, everyone. Dust off that book that has been sitting on your shelf since 1985. There's been a few changes since then. Some federal courts (Hawaii's for example) have quick dockets and cases move along. Which means these cases may get resolved more quickly. That's a good thing. People often think that we as lawyers like 'working the file' to increase our hours. Not true. It isn't fun to draft up fee invoices with entries like "research Rooker/Feldman doctrine," and "prepare England reservation." Streamlined litigation makes the process less painful all around.
And it isn't just the lawyers who need a refresher course. We will offer free CLE to any federal judge who wants to catch up on the last 30+ years of substantive takings law that you've missed out on, courtesy of Williamson County. We've spent the last three decades educating our state judiciaries, and now its time to do the same with the Article III lords.
Final decision - still needed
Williamson County's "finality" ripeness requirement was not challenged by Ms. Knick, and that part of the decision remains good law.
In most cases, property owners still need to obtain a final decision from the local government or agency about what uses, if any, may be made of their property under the allegedly restrictive regulation. You still need to know the remaining uses under the allegedly offending regulation before you can determine whether the economic impact on the owner of the regulation is so great that it goes "too far" and amounts to a taking.
Preclusion trap - also dead
The overruling of the state-litigation requirement also implicitly overruled the "preclusion trap" Catch-22 from San Remo, An owner may choose to litigate her state law takings or inverse claims in state court, and she does so, she will likely be barred from later raising a federal takings claim, but she is no longer are going to be forced to go to state court in the first instance and raise a state law inverse condemnation claim, only to be later told she thereby litigated the federal takings claim by implication.
Property owners: your choice of a state or federal forum. Property owners go ahead and file directly in federal court. But you can still bring a § 1983 claim in state court if you want.
Those claims are still subject to removal to federal court by municipal or state defendants.
Removal
What of the College of Surgeons' removal imbalance? Until Knick, a property owner could not raise a federal takings claim in federal court, but a municipal or state defendant could remove a state court takings action to federal court. Under Knick, a claim seeking compensation is a federal claim, purely and simply. The shenanigans which surrounded the remove-and-dismiss game, as well as the doctrinal imbalance of letting defendants to choose a federal forum while denying plaintiffs that same choice, are over.
Defendants: you have the same ability to remove state court claims to federal court like any other case.
Remedy: Show me the money
If you file a federal takings claim in federal court, the cause of action is § 1983, and the remedy sought should be limited to just compensation. A property owner is not going to get a federal court to enjoin a regulatory taking, or declare a statute or regulation unconstitutional. Unless for some reason no compensation is available. For example, what if the defendant is a state, and recovering compensation is barred in federal court by the Eleventh Amendment? If you are prohibited from your legal remedy of compensation, may you ask for an injunction under Ex parte Young?
Also, under our reading of Horne, an owner may raise a takings defense to imposition of a regulation or statute, i.e., you can't prosecute me because to do so would result in a taking.
Jury trial
You get a jury trial on your § 1983 claim. Del Monte Dunes.
State law inverse condemnation claims
It remains unsettled whether a state law inverse condemnation claim "arises under" federal law and can be brought in federal court. The majority declined to consider the SG's difficult-to-follow argument on that issue (Knick, p. 14 n.5).
Maybe the answer is that a federal court may consider pendent state law inverse condemnation claims as an adjunct of its jurisdiction to hear the federal takings claim.
Federal takings
The majority took great care to preserve the existing system of regulatory or inverse claims against the federal government, where you chase compensation for relatively small takings in district courts, for takings in excess of $10k in the Court of Federal Claims, and all appeals from both courts to the Federal Circuit. Federal takings mavens, keep doing what you are doing.
The issue of whether the Fifth Amendment requires a jury trial and an Article III forum in these cases is still up for grabs, we think (Brott).
Takings jurisprudence
The last -- and perhaps the hardest -- tea leaf to read is what, if anything, does the Knick opinion mean for success on the takings merits?
Does it signal a shift in how the Court is looking at property rights cases? After all, strictly speaking Knick is a procedural ruling, and the Court didn't rule for Ms. Knick on on the merits. There may be a compensable taking. Or there may not be. We don't know yet.
More than a few of the Court's past property rights cases are are like this: not definitive wins, but rather clarifying of the doctrine and sending the cases back down for more. Where, quite often, the owner eventually lost (here, however, the Third Circuit did note that "the Ordinance's inspection provision 'is constitutionally suspect and we encourage the [Township] to abandon it (or, at least, to modify it substantially)'"). We'll see.
The majority did clarify that loss of "productive use" and not loss of "value" is the hallmark of a regulatory taking, an issue the Court declined to review recently in Leone. But beyond that, Knick does not on its face result in a sea change (even though it might portend one).
And the beat goes on: just today, the Court denied review of Love Terminal Partners, a petition filed by SCOTUS uberlawyers, with a host of high profile amici, and a slick PR campaign. The notoriously vague and difficult-to-win Penn Central is still the "default" takings test in all but a narrow band of cases. The legislative vs adjudicative distinction for unconstitutional conditions remain unresolved (even though a new petition has been filed on that topic recently).
In that vein, is Kelo the next property rights precedent ripe for revisiting, as the Wall Street Journal's editorial suggested? We can't say even though we think its a good candidate. And what of just compensation law, a subject the Court hasn't visited since 1985? Lots of issues there. Undivided fee rule. Business losses. And yeah, Penn Central (legal scholars, time to make tenure by writing the definitive article proposing a better ad hoc takings test).
We'll finish up this post and our Knick series with this: we do get a sense that the property rights vibe is changing. Slowly, and not necessarily inexorably. But it is changing. There might not be a "golden age" on the horizon, but the outlook is certainly different -- better -- for property rights today after Knick, than it was, say, on Monday, November 7, 2016, when all forecasters were predicting a leftward turn at the Court for the conceivable future.
We will leave you with this, a message for you who are with us down in the trenches: while we like when the Supreme Court hands down decisions like Knick and sets the tone, it is maybe more important how lower courts and local regulators react to it. Will they read the handwriting on the wall, or dig their heels in?
That, colleagues, is entirely up to you.
