Knick: Williamson County Overruled

On June 21 the Court issued its decision in Knick v. Township of Scott overruling Williamson County and establishing that developers and other property owners suing local governments for alleged takings can henceforth file suit in either federal or state court.  In retrospect, the writing was on the wall when the Court issued its November 2018 order, following the initial oral argument the prior month, scheduling the case for a second oral argument.  The first time around the Court had only eight sitting justices, suggesting a 4 to 4 deadlock.  By the second argument newly confirmed Justice Brett Kavanaugh had joined the Court.  The upshot was a 5 to 4 decision, with all the Republican-appointed justices siding with the property owner and the four Democratic-appointed justices in dissent.  Sadly, one can say (and wish it were true) that there are no Republican or Democratic justices, but the votes in Knick suggest otherwise.

So what to make of the Knick decision?   How does it affect takings doctrine more generally?  And what are the practical implications for takings litigation?

The Merits of the Decision.  The merits of the decision warrant only brief comment.  Justice Elena Kagan correctly stated that the Court not only overruled Williamson County but “smashe[d] a hundred-plus years of legal rulings to smithereens.”  In Williamson County, the Court established that a takings claimant cannot sue a local government in federal district court under the Takings Clause if the state courts afford an opportunity for the claimant to secure the compensation she seeks.  As Justice Kagan explained, this decision logically followed from the principle, frequently repeated in cases stretching back to the late 19th century, that an alleged taking cannot be said to violate the Takings Clause so long as the government has established a procedure for a property owner to seek and secure compensation for a taking.  Williamson County simply recognized that widely available state court inverse condemnations proceedings met this requirement and therefore generally barred property owners from suing local governments in federal court under section 1983 in the first instance because their constitutional rights had not been violated.

In Knick, the Court, in an opinion authored by Chief Justice John Roberts, jettisoned the former bedrock principle that a taking (by itself) does not violate the Constitution, and ruled that a taking without advance or concurrent compensation violates the Takings Clause, so there is no reason the claimant cannot pursue her claim in either federal or state court.   The Court explained away the voluminous precedent establishing that a taking (by itself) does not violate the Takings Clause by saying these cases stand for the proposition that takings claimants are not entitled to an injunction when they can pursue a remedy at law by suing for just compensation.   As Justice Kagan explained in her dissent, this “inventive” explanation contradicts the Court’s actually stated reasoning in these prior cases (thus “smashing them to smithereens”), and also does not explain the contrary precedent arising from cases not involving requests for injunctive relief.

To support its new position that a taking violates the Takings Clause creating an immediate right to a compensatory remedy, the Court pointed to takings cases filed in the U.S. Court of Federal Claims, which are said to be “founded upon” the Takings Clause, and the decision in First English Evangelical Lutheran Church v. Los Angeles, in which the Court ruled that a citizen who suffers a taking is entitled to monetary compensation for a temporary taking even if the government rescinds the regulation in the face of a judicial finding of a taking.   The Knick Court goes so far as to suggest that First English “eliminate[d] the rationale for the state-litigation requirement” and set the table for the eventual overruling of Williamson County; but the First English Court nowhere said as much and explicitly explained that the holding in that case was compatible with Williamson County.  Neither First English nor the rulings addressing claims court litigation directly contradicted the long-standing rule that a local government does not violate the Takings Clause if the state provides an opportunity to secure compensation and prevent an uncompensated taking from ever occurring.

Adding the vitally important doctrine of stare decisis to the mix, the dissenters had the better of the argument based on basic takings principles and the weight and logic of prior Court precedent considered as a whole.   But that, as the saying goes, is water over the dam.

No Injunctive Relief.  Perhaps the most interesting question going forward is what Knick portends for the ability of property owners to sue to enjoin takings which, in the Court’s new terminology, “violate” the Constitution.   The Court’s opinion is replete with absolute or nearly absolute statements that going forward takings claimants will be limited to suit for compensatory relief and cannot seek injunctive relief.  For example, the Court says, “As long as just compensation remedies are available – as they have been for nearly 150 years — injunctive relief will be foreclosed,” and in the same vein, “As long as an adequate provision for obtaining just compensation exists, there is no basis to enjoin the government’s action effecting a taking,”  Somewhat less absolutely, the Court also says, “Given the availability of post-taking compensation, barring the government from acting will ordinarily not be appropriate,” and “because the federal and nearly all state governments provide just compensation remedies to property owners who have suffered a taking, equitable relief is ordinarily unavailable.”

In a concurring opinion, Justice Clarence Thomas distanced himself from the Court’s assurance that equitable relief would never (or almost never) be available in a takings case.  He insisted the Takings Clause “does not merely provide a damages remedy” for a taking, but makes contemporaneous payment of just compensation a “prerequisite” for a valid taking.    While recognizing that injunctive relief against uncompensated takings need not be routine, Justice Thomas said “I do not understand the Court’s opinion to foreclose the application of ordinary remedial principles to takings claims.”  In other words, in his view, takings claimants can seek to use Knick as a vehicle to expand the remedies available in takings cases.

The Court’s firm insistence that injunctive relief is generally not available in takings cases may appropriately be regarded as Knick’s silver lining.  Prior precedent justified the general rule that injunctive relief is not appropriate in takings cases by pointing out that a taking by itself is not unconstitutional so long as the claimant can pursue after-the-fact compensation.  Knick undermined the reasoning of these older cases by holding that a government taking “violates” the Constitution.    So what is the basis for the Court’s assurance that injunctive relief will still remain generally unavailable in takings cases?

The Court appears to be correct that after Knick injunctive relief should remain unavailable in takings cases (except in the above-mentioned exceptional cases), and the reason is that a viable takings claim (still) presupposes that the government is acting for a lawful “public use.”  The Knick Court approvingly explained that in Ruckelshaus v. Monsanto Co. the Court rejected the plaintiff’s claim for injunctive relief because “[e]quitable relief is not available to enjoin an alleged taking of private property for a public use, duly authorized by law, when a suit for compensation can be brought against the sovereign subsequent to the taking.”  The significance of the public use requirement also was highlighted in the Court’s First English decision, upon which the Knick majority relied heavily; the First English Court explained that the public use requirement demonstrates that the Takings Clause “is designed not to limit the governmental interference with property rights per se, but rather to secure compensation in the event of otherwise proper interference amounting to a taking.”

Knick unquestionably establishes, for better or for worse, that a taking without concurrent compensation “violates” the Takings Clause.  But the public use requirement of the Takings Clause means that a taking violates the Constitution in a different way than other types of government action that violate other provisions of the Bill of Rights.  A violation of the First Amendment or the Fourth Amendment, for example, involves a wrongful government act appropriately remedied using the full suite of litigation remedies generally available.   But a taking for a public use, by definition, is a lawful and rightful act — but for the fact that it is uncompensated.   This follows from the core principle (undisturbed by Knick) that the Takings Clause does not bar government from acting, but instead implicitly endorses the use of the eminent domain power (one of the basic attributes of sovereignty), so long as the taking is for a public use and the property owner is compensated.

Given the distinctive nature of a claim for compensation based on an alleged taking for a public use, compensation is the only logically permissible remedy, provided the compensation remedy is, in fact, available.   Thus, contrary to Justice Thomas’s suggestion, there is no reason to believe that lower courts can or should approach remedies in takings cases after Knick in the same way they approach remedies in other types of constitutional litigation.  Also, when the government has taken property for public use and paid compensation for the property taken, the government is entitled to ownership of the property.  The idea that a takings claimant might be entitled to enjoin a taking would deprive the government of the benefit of its decision, intentional or otherwise, to exercise the eminent domain power.

Justice Thomas offers no meaningful support for his suggestion that “ordinary remedial principles” should apply in takings cases.  He cites Justice Kennedy’s plurality opinion in Monterey v. Del Monte Dunes at Monterey Ltd. for the notion that takings “are not only unconstitutional, but may be tortious as well.”  Justice Kennedy made this statement in the context of addressing whether a property owner asserting a section 1983 takings claim was entitled to a jury trial.  His statement has no bearing on the issue of the appropriate remedy for a taking for public use.

More Complex Takings Cases.  In terms of litigation practice, the Knick decision will probably make takings litigation against local governments more procedurally complex than it was before.   Prior to Knick, a well–counseled property owner seeking to bring a takings claim against a local government filed suit in state court.  Period.   Now, lawyers representing property owners in takings lawsuits can forum shop between federal and state court.    This may well be advantageous to claimants in some circumstances; for example, if the precedents on a particular issue vary between the federal and state courts systems, filing in one court or the other might offer better prospects for litigation success.

Knick will undoubtedly give rise to numerous new questions about whether takings cases should be transferred in whole in part from federal court to state court or vice versa.  A threshold issue in every takings case is the nature and scope of the property interest allegedly taken.  That issue is almost always governed by state rather than federal law, a fact highlighted by Justice Kagan in her dissent. If a takings case is filed in federal district court, the federal court may wish to abstain in favor of state court, or invoke the certification process (where available) so a state court can authoritatively resolve the threshold state law issue.  The U.S. Court of Federal Claims and the U.S. Court of Appeals for the Federal Circuit commonly certify state law issues in takings cases against the United States to the highest court of the relevant state, and federal courts handling takings cases against local governments may well emulate this practice.  Enlisting the aid of the state courts in resolving state law issues raised in federal court takings cases will make the litigation process more protracted than it would be if plaintiffs simply filed in state court in the first instance.

At the same time, if the plaintiff sues in state court, the local government defendant may now seek to remove the case to federal court.   Prior to Knick, some local government defendants sought to remove takings cases to federal court, but that tactic was generally problematic because under Williamson County only the state courts could adjudicate such claims.   After Knick, of course, federal courts clearly have jurisdiction over takings claims against local governments.  Thus, removal should now be freely permitted when a government defendant sees some advantage in taking that step.

No doubt as the dust settles on the Knick decision there will be further issues to consider.  But this is a start.

Oregon Supreme Court on Physical Takings Claims

In the case of Dunn v. City of Milwaukie, the Oregon Supreme Court recently issued a valuable decision addressing the standards for when government can be held liable for a taking due to physical invasion of private property (at least under the Oregon Takings Clause, though the decision relies in part on federal precedent).

The case arose (hold your nose) when the city’s use of high-pressure “hydrocleaning” to wash the public sewer system caused sewage to back up and spill into the plaintiff’s house through toilets and other bathroom fixtures.   A jury found for the plaintiff and awarded compensation, and the award was affirmed by the Oregon Court of Appeals.  The Oregon Supreme Court has now reversed. Read on …

The Ninth Circuit Rules in Horne: The Plot Thickens

The Supreme Court’s takings decisions last term in Horne and Koontz have each generated considerable debate and consternation.  Now, the Ninth Circuit has issued a new ruling in Horne on remand that relies heavily on the analysis in Koontz to resolve the Hornes’ claim. The Ninth Circuit handed the government a win, ruling that the Hornes failed to demonstrate a taking due to the Secretary of Agriculture’s assessment of penalties against them for declining to “reserve” a portion of their raisin crop in accordance with the Agricultural Marketing Agreement Act of 1937.  Unfortunately, the Ninth Circuit’s legal analysis is an impenetrable tangle, largely because the Supreme Court itself has been so confusing, and the long-term implications of the Ninth Circuit’s decision are both unpredictable and troubling. Read on …

Koontz: Could it Get Any Worse?

Just when you thought the Koontz litigation couldn’t get any worse (see my article, Koontz: the Very Worst Takings Decision Ever?),the Florida Court of Appeals has issued a decision in the Koontz case on remand.  The Court split 2 to 1.

To recap, the case arose from the St John’s Water Management District’s denial of a permit to fill wetlands after the plaintiff and the District failed to come to terms on a combination of easement restrictions and off-site mitigation measures that would have allowed the District to issue the requested permit.  The Florida Supreme Court, reversing a decision by the Florida Court of Appeals, ruled that the Nollan/Dolan “exactions” standards do not apply to a permit denial when the government has imposed no “exactions.”  The U.S. Supreme Court reversed, holding that Nollan/Dolan do apply to a permit denial following a landowner’s refusal to accede to a demand for an exaction.

In this latest ruling in the case, on remand from the U.S. Supreme Court, the Court of Appeals reasoned that, since the court’s 2009 decision was “entirely consistent” with the Supreme Court’s 2013 decision, and since the Supreme Court’s  opinion “does not set forth a new legal construct” for analyzing the issues in the case, it should “reaffirm” its prior decision upholding the finding of a taking and a compensation award without the benefit of further briefing.  Given that the Court of Appeals previously awarded “just compensation” for a “taking” of private property, and the Supreme Court subsequently declared that the claim in Koontz was NOT based on a “taking,” the majority’s logic is more than a little suspect. Read on …

David Lucas’s Two Coastal Lots


David Lucas’ Lots 1994


David Lucas’ Lots 2014 (Courtesy of Meg Caldwell and Eric Hartge)

Second Circuit Decision on Williamson County

The Second Circuit has added new support to the Williamson County waiver theory in the case of  Sherman v. City of Chester.  In a nutshell, the court ruled that when a local government removes a federal takings claim from state court to federal court, it waives the opportunity to raise the state-exhaustion prong of Williamson County as an objection to the federal court proceeding.    This Second Circuit ruling follows a ruling by the Fourth Circuit in Sansonatta v. Town of Nags Head, issued in 2013, adopting the same conclusion.   The ruling in Sherman apparently means that a local government faced with multiple federal claims filed in state court will need to make an initial choice between litigating all the claims in federal court or litigating all of the claims in state court.

Importantly, the  decision does not cast doubt on the general rule that when a litigant initially files a takings claim in federal court, the government defendant can raise Williamson County and insist that the takings claim be litigated in state court.

The Second Circuit also ruled that the plaintiff met the finality prong of Williamson County by demonstrating that it would be “futile” to proceed with further applications because the town used “unfair and repetitive” procedures to raise a host of changing regulatory obstacles over about a decade to bar the plaintiff’s development project.

In a final interesting twist, the court concluded that the plaintiff stated a viable takings claim, at least sufficient to survive a Rule 12 motion to dismiss, on the theory that the shifting regulatory requirements that made it futile for plaintiff to seek to ripen his claim themselves constituted a taking.  We’ll be curious to see how this case unfolds on remand.