Court split on judicial takings

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The U.S. Supreme Court was expected to decide this term whether or not a state court can violate the Takings Clause, or whether only executive or legislative branches could do so.

But instead, the court issued a series of fractured opinions on June 17 that fail to offer guidance when a party claims his property has been taken without compensation by a court.

Four justices concluded in an opinion by Justice Antonin Scalia that the Takings Clause applies to the courts: “If a legislature or a court declares that what was once an established right of private property no longer exists, it has taken that property, no less than if the State had physically appropriated it or destroy its value by regulation (emphasis added by court).”

Justice Anthony Kennedy wrote in a concurrence joined by Justice Sonia Sotomayor that the Takings Clause is inapplicable; instead, if a court eliminates established property rights, which are a legitimate expectation of the owner, Kennedy said that the action would be “arbitrary or irrational,” and violate the Due Process Clause instead.

Justice Stephen Breyer wrote a separate opinion joined by Justice Ruth Bader Ginsburg, stating that it is unnecessary to resolve the issue in this case, and the court should refrain from addressing it.

The one thing the eight justices did agree on was that the Florida Supreme Court did not act unconstitutionally. Justice John Paul Stevens did not participate, presumably due to his ownership of oceanfront property in Florida, which was part of the issue.

The case was brought in Florida state court by oceanfront property owners. After several hurricanes eroded beaches on the coast, the state approved a project to dredge sand from the ocean and deposit it along the shore. The state claimed ownership in the filled area.

The owners claimed this violated their right to receive accretions to their property.

An “accretion” is a gradual and imperceptible addition to littoral property. An “avulsion” in contrast, is a sudden loss or addition to land. At common law, accretions belong to the property owner, and avulsions belong to the owner of the seabed (the State). When land is added to the shore by avulsion, the littoral owner has no right to subsequent accretions. In the Florida case, the state claiming ownership of the filled area prevented the property owners from receiving future accretions.

The Florida Supreme Court held that the right to accretions is a future contingent interest, not a vested property right. The owners then petitioned the U.S. Supreme Court for certiorari, arguing that the Florida Supreme Court’s holding itself constituted a taking, because the state itself created the avulsion.

The U.S. Supreme Court affirmed. On the merits, the Scalia opinion held that the Florida Supreme Court’s holding did not change the law, and thus could not be a taking.

Scalia wrote, “Perhaps state-created avulsions ought to be treated differently from other avulsions insofar as the property right to accretion is concerned. But nothing in prior Florida law makes such a distinction. … We cannot say that the Florida Supreme Court’s decision eliminated a right of accretion established under Florida law.”

But the bulk of the opinion was devoted to the question of whether or not a state court can violate the Takings Clause.

Concluding that it can, Scalia wrote, “It would be absurd to allow a State to do by judicial decree what the Takings Clause forbids it to do by legislative fiat.”

Scalia noted previous cases assuming, without expressly holding, that the Takings Clause does apply to the judiciary. PruneYard Shopping Center v. Robins, 447 U.S. 74 (1980); and Webb’s Fabulous Pharmacies Inc., v. Beckwith, 449 U.S. 155 (1980).

Scalia derided Justice Kennedy’s concurrence as propelling the court back to “the Lochner era,” by injecting due process into a case involving economic rights.

Concurrences

But, Justice Kennedy’s concurrence dismissed the concern over a return to the Lochner era, writing, “The Due Process Clause, in both its substantive and procedural aspects, is a central limitation upon the exercise of judicial power. And this Court has long recognized that property regulations can be invalidated under the Due Process Clause (cites omitted).”

Kennedy added, “The Court would be on strong footing in ruling that a judicial decision that eliminates or substantially changes established property rights, which are a legitimate expectation of the owner, is ‘arbitrary or irrational’ under the Due Process Clause.”

However, the Kennedy concurrence agreed with the plurality opinion that the Florida Supreme Court did not eliminate any property rights in this case.

Justice Breyer also wrote an opinion concurring in the result, but not the reasoning.

Breyer wrote, “the approach the plurality would take today threatens to open the federal court doors to constitutional review of many, perhaps large numbers of, state-law cases in an area of law familiar to state, but not federal judges. And the failure of that approach to set forth procedural limitations or canons of deference would create the distinct possibility that federal judges would play a major role in the shaping of a matter of significant state interest — state property law.”

Case analysis

The case is particularly noteworthy here in Wisconsin inasmuch as, just two days earlier, U.S. District Court Judge Rudolph T. Randa employed a due process analysis to hold that a Wisconsin Supreme Court opinion was arbitrary and irrational, and thus unconstitutional under the Due Process Clause. Gibson v. American Cyanamid Co., No. 07-C-864 (E.D.Wis., June 15, 2010).

Randa held that, by adopting the risk contribution rule in Thomas v. Mallett, 701 N.W.2d 523 (2005), and applying it to lead paint, the court violated the due process rights of a corporation that succeeded to a paint manufacturer’s liability through a series of mergers.

In his analysis, Randa relied primarily on the U.S. Supreme Court’s opinion in Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), which involved not a court opinion, but the Coal Industry Retiree Health Benefit Act of 1992.

The case at bar, however, is more on point than Eastern Enterprises, because it squarely considers whether a judicial opinion can constitute a taking, or a violation of due process.

In one respect, the Supreme Court opinion is a validation of Randa’s opinion. Four justices concluded that a state supreme court opinion can constitute a taking; two more concluded that it can violate due process.

Thus, a majority of justices accept Randa’s holding that a state supreme court opinion which unsettles established property rights is subject to federal court review as either a taking of property or a due process violation.

Of course, it remains an open question whether appellate courts will agree that the Thomas opinion eliminates established property rights.

And the problem that Randa faced — what methodology to use to decide the issue — remains. Because no opinion garnered a majority in the Supreme Court, attorneys and lower courts cannot know whether they should use the Takings Clause or the Due Process Clause to analyze such claims.

As a result, attorneys need to be prepared to argue both.