Raisins, personal property, and just compensation

So, as posted earlier, this the morning US Supreme Court handed down a fascinating takings decision in Horne v. Department of Agriculture. I think as both Logan and I work through the decision, we’ll do a series of posts. Logan had written about the case as it made its way through the courts (you can find those posts here and here).

Here are some of the highlights from Chief Justice Roberts majority opinion (all quotes come from the Horne Slip Opinion, which I’ll just identify as “Slip Opinion”):

The Court determined, contrary to the Government’s argument and a decision by the Ninth Circuit, that first, personal property is as protected as real property from being taken. To quote the Chief Justice, “The Government has a categorical duty to pay just compensation when it takes your car, just as when it takes you home” (Slip Opinion, p. 5).  There’s a lengthy discussion in the decision concerning the history of the takings clause and why agricultural crops, in particular, have featured in that history.

Toward the end of that historical discussion, Chief Justice Roberts writes,

“According to the author of the first treatise on the Constitution, St. George Tucker, the Takings Clause was ‘probably’ adopted in response to ‘the arbitrary and oppressive mode of obtaining supplies for the army, and the public uses by impressment, as was too frequently practiced during the revolutionary war, without any compensation whatever.’ [citing Blackstone’s Commentaries] (Slip Opinion, p. 6).

This brings the Chief Justice to the distinction between regulatory and physical takings, which for the majority is very important in this case. They see appropriation of raisins as a physical taking of private property rather than a regulatory taking. This matters because the constitutional rules around physical takings are pretty simple: if the government physically takes property, just compensation is due. However, it’s more complicated with regulatory takings, which Chief Justice Roberts says are more flexible and more forgiving than the jurisprudence around physical takings. Indeed, regulatory takings cases require, under Lucas v. South Carolina Coastal Council, a “total wipe-out” of value before they require just compensation.

Again, quoting from today’s decision:

Lucas, however, was about regulatory takings, not direct appropriations. Whatever Lucas had to say about reasonable expectations with regard to regulations, people still do not expect their property, real or personal, to be actually occupied or taken away. Our cases have stressed the ‘longstanding distinction’ between government acquisitions of property and regulations… The different treatment of real and personal property in a regulatory case suggested by Lucas did not alter the established rule of treating direct appropriations of real and personal property alike.”

The distinction provides the Court with the basis for overturning the Ninth Circuit’s opinion because the Ninth Circuit had used Lucas to decide Horne — and today, the Court says that this was the wrong line of precedents to apply in deciding a case involving the physical taking of personal property (i.e., the raisins).

There’s a few things that I find especially interesting in the decision: first, there’s a strong implication that the Supreme Court would have seen a regulation that limited production of raisins differently than a law that required the surrender of already produced raisins to the government. Chief Justice Roberts writes,

“A physical taking of raisins and a regulatory limit on production may have same economic impact on a grower. The Constitution, however, is concerned with means as well as ends. The Government has broad powers, but the means it uses to achieve its ends must be ‘consistent with the letter and spirit of the constitution.’ [citing McCulloch v. Maryland]”.

The issue that matters to the Court in Horne is that the raisins were actually physically taken from the owners. Or would have been, had the Hornes complied with the law (which they did not — and were fined the market value of the raisins ($438,000) plus an additional $200,000 for breaking the law by not surrendering the raisins — something the majority says they did not understand they were required to do).

That brings me to another interesting point: the Chief Justice mentions more than once that this program is mandatory and not voluntary. Chief Justice Roberts says that had it been voluntary, of course, there would be no taking. This is also interesting…  Between this and the language around a regulatory limit on production vs. a taking of produce, I wonder if there are not hints here concerning what the Court thinks would be an acceptable way to control the raisin market… But that’s just a thought that ran through my mind as I read through the case. There is no indication that the majority were sending such signals to Congress in the actual text.

While the 8-1 decision (Justice Sotomayor was the lone dissenter) on the issue of whether the raisins were taken seems to really hinge on the idea that the raisins are personal property that was physically taken away and is pretty straight forward, the decision becomes a little more complicated on the issue of just compensation. On the issue of determining what just compensation is, the Court split 5-4. In the minority, three of the four (Justices Breyer, Ginsburg and Kagan) wanted the case to be remanded back to the Ninth for an inquiry into whether the price of the raisins in the years that were of concern in the case would have yielded just compensation to the Hornes for the loss of their raisins. Chief Justice Roberts and four other members (Scalia, Kennedy, Thomas and Alito) decided, however, that in levying a fine of the market value of the raisins, the Government had already determined what the just compensation should be. That just compensation should be the market value of the raisins. Moreover, they were concerned because the value of the raisins is itself set by “the taker”, i.e., the Government. This was clearly an issue for the 5 who believed that the market value assessed by the Government was the best way to go. The implication, from my reading, is that they did not want to leave it to the Government to decide whether “just compensation” had been provided by the price of the raisins. I’ll go into that issue when I discuss the concurrence in another post. Therefore, the Supreme Court said today the Hornes do not owe the fine to the Government.

One last interesting note: in deciding not to remand the case, the Chief Justice points out that the case had been nearly a decade in litigation, and that it was time for the matter to be settled. He should know a lot about takings cases that take a long time — he was the lawyer that argued Tahoe Sierra Preservation Council v. Tahoe Regional Planning Agency for the agency (i.e., the regulator — yes, he was a hired gun at one time in his life). In that case, which is cited more than once in today’s decision, the litigation had taken so long to make its way to the Supreme Court that many of the original land owners involved in the lawsuit had passed away and their heirs were left to see the litigation through. I’ve mentioned as well that sometimes these cases start to feel a bit like the situation that Charles Dickens wrote about in Bleak House with regard to yet another takings case, Palazzolo v. Rhode Island. There is, indeed, something be said to seeing the end of a case, particularly for the litigations and especially when the courts are already overburdened with litigation. Perhaps that is a discussion for another day, but it is worth noting that the Court seems to be paying attention to the timeline in these takings disputes.

Horne v. Department of Agriculture Decided!! Raisins!!! 2

The US Supreme Court has reversed the Ninth Circuit, and found that the Fifth Amendment does in fact require just compensation when it takes personal property, just as it does when it takes real property. While parts of the decision (concerning compensation, in particular) is 5-4, on the matter of whether a taking occurred, the Court came in with an 8-1 vote. Very interestingly, the Hornes, says Chief Justice Roberts, do not have to pay a fine and then seek compensation under the Tucker Act, but may raise a takings-based defense to the fine itself. Market value is the measure for property taken through government action.

We’ll have more on Horne once we’ve been able to read and analyze the case! In the meantime, here’s the decision if you want to read it yourself: Horne v. Department of Agriculture.