Looking for “property” in 9th circuit workers comp “lien activation” case

In another demonstration of the challenges sometimes presented by the need to identify the relevant property interest in a takings case, the U.S. Court of Appeals for the Ninth Circuit recently ruled in Angelotti Chiropractic, Inc. v. Baker that a takings claim failed for lack of a predicate property interest. The case involved an alleged taking based on a California law requiring medical providers to pay an “activation fee” in order to enforce a “lien” covering payment for medical services. Read the rest of this entry »


Catching Up

Ever since the cert. grant in Horne v Department of Agriculture in January, plus teaching responsibilities, plus a bunch of other things, I have been delinquent in keeping this blog up to date.  With the Horne argument before the U.S. Supreme Court yesterday and my last class today, I feel liberated.  I’ll have some observations on the oral argument in Horne tomorrow.   But first, some accounting of what I have been up to:

I filed this amicus brief on behalf of the International Municipal Lawyers Association in the Supreme Court in Horne.

Thirteen briefs were filed in support of the Petitioners,  and the second brief in support of the Respondent was filed by Sun-Maid Growers of California.  So, at a minmum, the IMLA brief offers the Court a unique perspective.

Here is a new article on Koontz, “The Costs of Koontz,” which will be published in the Vermont Law Review, 39 Vt. L. Rev. 573 (2015).   The purpose of the article is to lay out as plainly as I can the costs of Koontz in terms of (1) increased incoherence of takings doctrine, (2) impairment of separation of powers, (3) undermining of federalism values, and (4) lost effectiveness and efficiency of land protection and management.

It is a follow up to “Koontz: The Very Worst Takings Decision Ever?” published in the NYU Environmental Law Review.

Finally, this piece was just published by the Harvard Law Review Forum as a Response to an Essay by Professor Tom Merrill  published in the Harvard Law Review, “Eschewing Anticipatory Remedies for Takings: A Response to Professor Merrill,” responding to “Anticipatory Remedies for Takings,” 128 Harv. L. Rev. 1630 (2015).

Comments welcome.

John Echeverria

 


Trolling for Windfalls

On September 30, 2014, the federal District Court for the District of Columbia let the first shoe drop in the controversial takings litigation based on the federal government’s bailout of the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). In Perry Capital, LLC v. Lee, the District Court (Judge Royce Lamberth) rejected stockholder claims that the decision by the Federal Housing Finance Agency (“FHFA”) to virtually wipe out the stockholders’ equity in these companies resulted in a compensable taking.  An appeal will surely follow.

In 2008, during the so-called Great Recession, after Fannie Mae and Freddie Mac had suffered serious financial losses as a result of widespread mortgage defaults, the FHFA placed the companies into a conservatorship.  The terms of the conservatorship evolved over time. In 2012, the companies and the FHFA entered into an agreement that required the companies, in consideration for the infusion of taxpayer dollars, to pay a quarterly dividend to the Treasury Department equal to the entire worth of the companies, minus only a small reserve that shrinks to zero over time.  Various shareholders, including some hedge funds that purchased shares in the companies at a deep discount, brought suit seeking just compensation for the taking of their stakes in the companies.  (The lawsuit might have proceeded in the District Court, rather than the U.S. Court of Federal Claims, because the plaintiffs framed their case as a class action suit under the Little Tucker Act.)

Judge Lamberth rejected the takings claim on the ground that the plaintiffs lacked a protected property based on their stock in the companies given that the shareholders were at all times exposed to the risk, based on pre-existing federal regulations, that they might lose their investments if and when the companies were placed in a conservatorship.  Relying on several Federal Circuit precedents involving similar cases, the District Court ruled that the “shareholders necessarily lack the right to exclude the government from their investment when FHFA places the [companies] under governmental control—e.g., into conservatorship.”  In addition, and in the alternative, the Court ruled, emphasizing the plaintiffs’ lack of reasonable investment-backed expectations, that the plaintiffs’ takings claims failed under the Penn Central analysis.

For a withering critique of this litigation – and the similar AIG lawsuit – see Stephen Ratner’s column in the NY Times.


The scope of “background principles”

The Second Circuit’s August 1, 2014, decision in 1256 Hertel Ave. Associates, LLC v. Calloway, illustrates a not uncommon problem in takings law – how the straightforward application of the Supreme Court’s established takings rules sometimes leads to, or at least suggests, problematic outcomes, and how creative courts sometimes avoid the problem. Read the rest of this entry »