Amicus Curiae Brief — Chong Yim, et al., Petitioners v. City of Seattle, Washington

No. 19-1136

IN THE

Supreme Court of the United States

________________

CHONG AND MARILYN YIM, ET AL.,

Petitioners,

v.

CITY OF SEATTLE, WASHINGTON,

Respondent.

________________

On Petition for Writ of Certiorari to

the Supreme Court of Washington

_________________________________________________

BRIEF OF THE CATO INSTITUTE AND REASON

FOUNDATION AS AMICI CURIAE IN SUPPORT OF

PETITIONERS

_________________________________________________

Manuel S. Klausner

LAW OFFICES OF MANUEL S.

KLAUSNER

Wells Fargo Center

333 S. Grand Ave., Suite 4200

Los Angeles, CA 90071

(213) 617-0414

mklausner@klausnerlaw.us

April 10, 2020

Ilya Shapiro

Counsel of Record

Trevor Burrus

Sam Spiegelman

CATO INSTITUTE

1000 Mass. Ave., N.W.

Washington, D.C. 20001

(202) 842-0200

ishapiro@cato.org

i

QUESTION PRESENTED

Whether the Court should, in view of precedent

and longstanding principle, subject deprivations of

“fundamental attributes” of ownership to a Lucasstyle “per se takings” analysis, instead of the existing

Penn Central “partial regulatory takings” test.

ii

TABLE OF CONTENTS

QUESTION PRESENTED ........................................ i

TABLE OF AUTHORITIES .................................... iii

INTEREST OF AMICI CURIAE .............................. 1

INTRODUCTION AND SUMMARY OF

ARGUMENT ....................................................... 2

ARGUMENT ............................................................. 3

I.

THIS COURT’S PRECEDENT AND

TRADITIONAL LEGAL PRINCIPLES

SUGGEST THAT DEPRIVING THE RIGHT

TO CHOOSE TENANTS EFFECTS A

TAKING .............................................................. 5

A. The Court Has Subjected

Fundamental Attributes of Ownership

to a Bright-Line Rule Rather than

Penn Central’s Complex, Ad Hoc Test ........ 5

B. The Right to Exclude Unwanted

Tenants Is a Fundamental Ownership

Attribute That Should Be Analyzed

Categorically Rather Than

Incrementally ............................................. 13

II. THIS CASE IS AN EXCELLENT VEHICLE

FOR REMOVING FUNDAMENTALATTRIBUTE TAKINGS FROM PENN

CENTRAL’S ANALYTICAL FRAMEWORK .. 17

CONCLUSION ........................................................ 19

iii

TABLE OF AUTHORITIES

Page(s)

Cases

Andrus v. Allard, 444 U.S. 51 (1979) .................. 7, 16

Ark. Game & Fish Comm’n v. United States,

568 U.S. 23 (2012) .................................................. 3

Chippewa Indians of Minn. v. United States,

305 U.S. 479 (1939) ................................................ 9

Chong Yim v. City of Seattle,

194 Wn.2d 651 (Wash. 2019) ........................... 4, 18

Dugan v. Rank, 372 U.S. 609 (1963) ....................... 10

Int’l News Service v. Associated Press,

248 U.S. 215 (1918) .............................................. 13

Kaiser Aetna v. United States,

444 U.S. 164 (1979) .............................................. 13

Keystone Bituminous Coal Ass’n v. DeBenedictis,

480 U.S. 470 (1987) .......................................... 9, 10

Lingle v. Chevron U.S.A. Inc.,

544 U.S. 528 (2005) ................................................ 4

Loretto v. Teleprompter Manhattan CATV Corp.,

458 U.S. 419 (1982) .......................................... 3, 12

Louisville Joint Stock Land Bank v. Radford,

295 U.S. 555 (1935) ................................................ 9

Lucas v. S.C. Coastal Council,

505 U.S. 1003 (1992) .............................3, 11, 12, 14

Murr v. Wisconsin, 137 S. Ct. 1933 (2017) ................ 8

Palazzolo v. Rhode Island, 533 U.S. 606 (2001) ..... 12

iv

Page(s)

Penn Cent. Transp. Co. v. New York City,

438 U.S. 104 (1978) ............................................ 2, 6

Pennsylvania Coal Co. v. Mahon,

260 U.S. 393 (1922) ............................................ 4, 5

Tahoe-Sierra Pres. Council v. Tahoe Reg’l

Planning Agency, 535 U.S. 302 (2002)....... 8, 15, 16

United States v. Causby, 328 U.S. 256 (1946) ......... 12

United States v. Dickinson, 331 U.S. 745 (1947) ...... 9

United States v. General Motors Corp.,

323 U.S. 373 (1945) ............................................ 7, 8

United States v. Pewee Coal Co.,

341 U.S. 114 (1951) .............................................. 10

Webb’s Fabulous Pharms. v. Beckwith,

449 U.S. 155 (1980) .............................................. 10

Statutes

Seattle Mun. Code § 14.08.030 ................................ 18

Seattle Mun. Code § 14.08.050(A)(4) ....................... 17

Seattle Mun. Code § 22.206.160(C) ......................... 13

Other Authorities

J. Peter Byrne, Historic Preservation and Its

Culture Despisers: Reflections on the

Contemporary Role of Preservation Law in

Urban Development, Geo. Pub. L. and Legal

Research Paper No. 12-021 (2012) ....................... 19

Margaret Jane Rudin, The Liberal Conception of

Property: Cross Currents in the Jurisprudence

of Takings, 88 Colum. L. Rev. 1667 (1988) ............ 9

v

Page(s)

Mark Fenster, The Stubborn Incoherence of

Regulatory Takings,

28 Stan. Envtl. L.J. 525 (2009) ............................ 20

Steven J. Eagle,

Regulatory Takings, 3d ed. (2005) ............. 7, 15, 17

1

INTEREST OF AMICI CURIAE1

The Cato Institute was established in 1977 as a

nonpartisan public policy foundation dedicated to

advancing the principles of individual liberty, free

markets, and limited government. Cato’s Robert A.

Levy Center for Constitutional Studies was

established to restore the principles of limited

constitutional government that are the foundation of

liberty. Toward those ends, Cato publishes books and

studies, conducts conferences and forums, and

produces the annual Cato Supreme Court Review.

Reason Foundation is a nonpartisan and nonprofit

public policy think tank, founded in 1978. Reason’s

mission is to advance a free society by applying and

promoting libertarian principles and policies. Reason

supports dynamic market-based public policies that

allow individuals and voluntary institutions to

flourish. Reason advances its mission by publishing

Reason magazine, as well as commentary on its

websites, and by issuing research reports. To further

its commitment to “Free Minds and Free Markets,”

Reason selectively participates as amicus curiae in

cases raising significant constitutional issues.

This case interests amici because the

“fundamental attributes” of property—its “bundle of

rights”—should be accorded the same protection from

state interference as those of life and liberty, the other

two pillars of the Lockean political philosophy that is

the foundation of our nation’s formative documents.

1 Rule 37 statement: All parties were timely notified and

consented to the filing of this brief. No part of this brief was

authored by any party’s counsel, and no person or entity other

than amici funded its preparation or submission.

2

INTRODUCTION AND

SUMMARY OF ARGUMENT

The facts of this case are straightforward. Seattle

now requires that residential landlords give potential

tenants a 48-hour “right of first refusal” in the order

in which they applied to lease a property. Several

landlords—most of whom are ordinary people who

“own[] and manage[] no more than a handful of rental

housing

spaces”—claim

this

limits

their

“fundamental” right to “alienate or lease property,”

and thereby effects a taking. Pet. Br. at 4, 14.

The Washington Supreme Court concluded that

the “first-in-time” rule does not violate the Fifth

Amendment’s protection against the taking of private

property without just compensation. As is common in

recent “partial” takings jurisprudence, the court

applied the Penn Central test, which holds that when

a regulation results in anything less than a total

diminution in value of the “parcel as a whole,”

whether a taking has occurred depends on the

“investment-backed expectations” of, and “economic

impact” on, the owner, in addition to the “character of

the governmental action.” Penn Cent. Transp. Co. v.

New York City, 438 U.S. 104, 124 (1978). Courts often

minimize the historical and philosophical importance

of property rights to apply Penn Central’s balancing

act—an ad hoc analysis of case-specific factors that

too often results in economic considerations leading

legal doctrine, rather than vice versa.

In view of lower courts’ inconsistent treatment of

Penn Central, the Court in Ark. Game & Fish Comm’n

v. United States conceded that “[n]o magic formula

enables a court to judge, in every case, whether a

3

given government interference with property is a

taking.” 568 U.S. 23, 31 (2012). But as the Court

acknowledged in Ark. Game & Fish Comm’n, brightline tests apply when (1) there is a physical invasion

of property, however slight, and (2) a regulation

effects a total loss of a property’s use and value. Id. at

31–32 (citing Loretto v. Teleprompter Manhattan

CATV Corp., 458 U.S. 419, 426 (1982) and Lucas v.

S.C. Coastal Council, 505 U.S. 1003, 1019 (1992)).

It makes some sense to apply the “total loss”

standard to the type of economic diminution seen in

Lucas. After all, government regulations affect the

economic uses of a property in myriad, unquantifiable

ways. Some are clear. Zoning regulations prevent a

homeowner from building a McDonald’s in a

residential

neighborhood,

thereby

possibly

diminishing the economic value of the land. Yet

compensation is not owed. Abridging the right to

exclude unwanted tenants, however, is of a different

and non-linear character. How many people must the

government require a landowner to lease to before

there is a “total loss” of the right to exclude unwanted

occupants? The question is almost incoherent, but

most property owners know the answer: one.

Amici ask the Court to narrow the Penn Central

doctrine to find that deprivations of the fundamental

attributes of ownership, such as the right to exclude

unwanted lessees, should be analyzed using a brightline test similar to those used in Loretto and Lucas.

ARGUMENT

The Washington Supreme Court held below that

the “definition of regulatory takings set forth” in

4

Lingle v. Chevron U.S.A. Inc. guided its application of

Penn Central. Specifically, “when regulations present

such extraordinary circumstances that categorical

rules are appropriate . . . Chevron U.S.A definitively

held that there are only ‘two relatively narrow

categories’ of ‘regulatory action that generally will be

deemed per se takings.’” Chong Yim v. City of Seattle,

194 Wn.2d 651, 689 (Wash. 2019) (quoting Lingle, 544

U.S. 528, 538 (2005)).

But this Court has indicated that it is open to

exploring other categorical exceptions to ad hoc

analyses of “partial regulatory takings” that “go[] too

far.” See Pennsylvania Coal Co. v. Mahon, 260 U.S.

393, 415 (1922). These signals, coupled with the

historical view of property on which they are based,

suggest that the deprivation of any “fundamental

attribute” of ownership is closer to a Loretto- and

Lucas-style taking than a Penn Central one.

Seattle’s “first-in-time” rule is indeed a

deprivation, and not merely an interference, with the

right “to determine who will live on one’s property.”

Pet. Br. at 13. The “first-in-time” rule prevents

landlords from readjusting their pre-listing criteria

once applications are submitted. The landlord is stuck

with whoever accepts the listing offer within the 48hour first-refusal period.

Once the listing is up, the landlord has no

discretion to choose who occupies their property,

whether the first-in-time is an avowed white

supremacist or simply makes the landlord

uncomfortable. And the restriction is not like prelisting restrictions, such as prohibitions on race-based

and family-status-based discrimination. Those

5

proscribe landlords’ choosing based on specific

criteria; they do not proscribe any choice whatsoever.

Pre-listing restrictions do not totally interfere with

owners’ right to determine who will live on their

property. Owners still retain discretion in choosing

tenants based on their own personal criteria.

I. THIS COURT’S PRECEDENT AND

TRADITIONAL LEGAL PRINCIPLES

SUGGEST THAT DEPRIVING THE RIGHT

TO CHOOSE TENANTS EFFECTS A

TAKING

The Court here has an opportunity to clarify the

ad hoc Penn Central test for going “too far” and

explain that the taking of a “fundamental attribute”

of property deserves a more bright-line rule. On one

side of the line would be physical invasions and

deprivations of any other fundamental aspect of

ownership, analyzed by a new test combining Loretto,

Lucas, and this case. On the other side are

interferences that might (or might not) “go[] too far.”

See Pennsylvania Coal, 260 U.S. at 415.

A. The Court Has Subjected Fundamental

Attributes of Ownership to a BrightLine Rule Rather than Penn Central’s

Complex, Ad Hoc Test

Outside of Penn Central and its progeny, courts

have relied on historical-philosophical conceptions of

property in drawing the line between deprivations

(the complete taking of a fundamental attribute of

ownership, such as physical occupation) and mere

interferences (adjustments to how a property can be

used, such as zoning). Pre- and post-Penn Central

6

jurisprudence provides evidence of this reliance, and

shows that Penn Central is not the benchmark for

evaluating any and all cases outside the Loretto

(physical) or Lucas (per se regulatory) exceptions.

Penn Central’s “investment-backed expectations”

and “economic interest” prongs, while meant to

promote the “reciprocity of advantage” at the heart of

a “law and economics” approach to property law, has

some role in cases involving true “partial takings.”

Where the owner doesn’t suffer a total interference

(i.e., a deprivation), it should not offend the Takings

Clause to balance the costs he suffers against the

benefits he derives, or the costs imposed on others

similarly situated. But when the state destroys a

“fundamental attribute” of ownership, questions of

economic efficiency are of secondary concern, and it

could hardly excuse a deprivation to argue that all

similarly situated owners have suffered it.

Deprivations of fundamental property attributes,

like the right to exclude unwanted tenants, merit

something closer to a Lucas or Loretto, rather than a

Penn Central, analysis. Unfortunately, since 1978 the

Court has in several cases endorsed what might be

called Penn Central’s “anti-segmentation” view of

ownership. From this perspective, the logic behind

the “parcel as a whole” theory is adapted to the

“bundle of rights” theory, so that the destruction of

some “sticks” in the bundle is not a taking unless it

aggregately destroys the entire bundle. The Court in

Penn Central even said that “‘[t]aking’ jurisprudence

does not divide a single parcel into discrete segments

and attempt to determine whether rights in a

particular segment have been entirely abrogated.”

438 U.S. at 130; see also Andrus v. Allard, 444 U.S.

7

51, 65–66 (1979) (“At least where an owner possesses

a full ‘bundle’ of property rights, the destruction of one

‘strand’ of the bundle is not a taking, because the

aggregate must be viewed in its entirety.”). That

shouldn’t be true, and it often hasn’t been true.

Both before and since Penn Central, the Court has

hinted that the “strands” can be segmented to

determine whether there has been a taking of discrete

portions of a property. In Palazzolo v. Rhode Island,

the majority admitted that “we have at times

expressed discomfort with the logic of [the] rule” that

“the extent of deprivation effected by a regulatory

action is measured against the value of the parcel as

a whole.” 533 U.S. 606, 631 (2001) (cleaned up). From

this, Professor Eagle infers a “desire of a majority of

the Justices to severely limit the application of the

‘parcel as a whole’ rule, without questioning whether

the Court is involved in an effort to minimize the

revolutionary change that repudiation of the

‘property as a whole rule’ would bring about.” Steven

J. Eagle, Regulatory Takings, 3d ed., 812 (2005).

Before Penn Central, in United States v. General

Motors Corp., the Court proffered that the term

“property” in the Fifth Amendment was employed “to

denote the group of rights inhering in the citizen’s

relation to the physical thing, as the right to possess,

use and dispose of it.” 323 U.S. 373, 378 (1945). The

“interest” in that property, the Court continued, “may

comprise the group of rights for which the shorthand

term is ‘a fee simple’ or it may be the interest known

as an ‘estate or tenancy for years.’” Id. But the

Constitution protects all of it, the Court said: “The

8

constitutional provision is addressed to every sort of

interest the citizen may possess.” Id.2

Thus, General Motors speaks to the “prosegmentation” view of property rights, whereby the

destruction of one segmented “strand” in the bundle,

while not destroying (or possibly even interfering

with) the other strands, is still cognizable as a taking

of that segmented right. The Court has at times

“segmented” property along horizontal (adjacent lots),

vertical (subterranean mining), and temporal

(temporary moratoria) axes, even if at other times it

has agglomerated abutting interests. Compare

Keystone Bituminous Coal Ass’n v. DeBenedictis, 480

U.S. 470 (1987) and Tahoe-Sierra Preserv. Council,

Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302

(2002) with Murr v. Wisconsin, 137 S. Ct. 1933 (2017).

The Court has struggled to reconcile the “parcel as

a whole” rule with state actions against parcel

portions that would effect a taking if aggregated but

do not individually go too far. If a parcel worth

$100,000 loses $10,000 annually from an onerous

regulation, a Lucas-type taking occurs only in the

tenth year. This example shows the wisdom of

segmentation: once a parcel portion is interfered with,

whether that “goes too far” questions interference

with the “bundle of rights” in that portion. See

2 The General Motors majority concluded that “the Fifth

Amendment concerns itself solely with the ‘property,’ i.e., with

the owner’s relation . . . to the physical thing and not with other

collateral interests which may be incident to his ownership.” Id.

at 378. Importantly, the Court was speaking to such “incidents”

as “the expense of moving removable fixtures and personal

property from the premises” and “the loss of good-will”—both far

from the traditional “fundamentals” of ownership. Id.

9

DeBenedictis, 480 U.S. at 517 (Rehnquist, C.J.,

dissenting) (“[T]here is no need for further analysis

where the government by regulation extinguishes the

whole bundle of rights in an identifiable segment of

property, for the effect of this action on the holder of

the property is indistinguishable from the effect of a

physical taking.”).

In Pruneyard Shopping Ctr. v. Robins, the Court

again endorsed the pro-segmentation view: “The term

‘property’ as used in the Takings Clause includes the

entire ‘group of rights inhering in the citizen’s

[ownership].’” 447 U.S. 74, 83 n.6 (1980) (quoting

General Motors, 323 U.S. at 377–78). Robins is not an

outlier in segmenting sticks from the bundle of rights.

Several of this Court’s majorities and (persuasive)

dissents reflected the idea that “every regulation of

any portion of an owner’s ‘bundle of sticks’ is a taking

of that particular portion considered separately.”

Margaret Jane Rudin, The Liberal Conception of

Property: Cross Currents in the Jurisprudence of

Takings, 88 Colum. L. Rev. 1667, 1676 (1988). See

also Louisville Joint Stock Land Bank v. Radford, 295

U.S. 555 (1935) (state law effected a taking when it

extinguished mortgagor’s remaining debt to

mortgagee, even though the mortgagee retained a

right to “reasonable rent”); Chippewa Indians of

Minn. v. United States, 305 U.S. 479 (1939) (Congress

violated the Takings Clause when it converted tribal

lands into a national forest, although the lands were

to be held in trust and the tribe was to receive the

proceeds from the sale of its timber); United States v.

Dickinson, 331 U.S. 745 (1947) (taking occurred when

gradual flooding of property “stabilized,” even when

the land, as a whole, was not condemned); United

10

States v. Pewee Coal Co., 341 U.S. 114, 116 (1951)

(holding the federal government effected a taking

when, in wartime, it “required mine officials to agree

to conduct operations,” i.e., retaining the right to

manage, “as agents for the Government”); Dugan v.

Rank, 372 U.S. 609 (1963) (suggesting that a

requisition of a portion of owner’s water rights merits

compensation under the Tucker Act).

Among pro-segmentation cases, Webb’s Fabulous

Pharmacies Inc. v. Beckwith serves as a particularly

stark example. There, the Court held that a county’s

siphoning of interest from an account meant to pay

down the pharmacy’s creditors once final judgment

was entered constituted a taking because the county

government was not entitled to the interest as a fee

for services. “The usual and general rule is that any

interest on an interpleaded and deposited fund

follows the principal and is to be allocated to those

who are ultimately to be the owners of that principal.”

449 U.S. 155, 162 (1980). It is immaterial that the

creditors would eventually be made whole. The taking

lay in the county’s confiscation of any funds in which

the creditors held an interest. The Court in Pewee

Coal similarly held that it did not make a difference

that the mining company would have suffered a

greater profit loss had the federal government not

intervened in its operations. 341 U.S. at 118.

In his dissent in DeBenedictis, Chief Justice

Rehnquist wrote that a regulation effects a taking if

it “extinguishes the whole bundle of rights in an

identifiable segment of property.” 480 U.S. at 517

(Rehnquist, C.J., dissenting) (emphasis added). While

Rehnquist was referring to separable estates, not

rights, the Lucas majority arguably conceives of each

11

right in each estate or other interest as similarly

separable from the “whole” bundle. In his influential

Footnote 7, Justice Scalia surmised that the answer

to the “denominator problem”—the difficulty in

ascertaining the baseline property subject to a

potential taking—“may lie in how the owner’s

reasonable expectations have been shaped by the

State’s law of property,” Lucas, 505 U.S. at 1016, n.7,

including common-law background principles and,

presumably, traditional definitions of property rights.

But because the question in Lucas was of a total value

loss, the Court had no opportunity to consider other

ownership

attributes;

the

regulation

had

constructively extinguished nearly all of them at once.

Indeed, there are several other categories hidden

between the lines. In Hodel v. Irving, the Court

examined a law that “amount[ed] to virtually the

abrogation of the right to pass on a certain type of

property—the small undivided interest—to one’s

heirs” and described the government regulation as

“extraordinary.” 481 U.S. 704, 716 (1987). The Court

concluded that, “[i]n one form or another, the right to

pass on property—to one’s family in particular—has

been part of the Anglo-American legal system since

feudal times.” Id. Even though the law sought to

address the “fractionation of Indian lands” which the

Court described as “a serious public problem,” it was

“not appropriate is to take the extraordinary step of

abolishing both descent and devise of these property

interests.” Id. at 718.

In a similar vein as Hodel, Justice O’Connor, in

her concurrence in Palazzolo v. Rhode Island,

emphasized that “investment-backed expectations” in

the property was not required to establish a taking.

12

The Court had never “held that a takings claim is

defeated simply on account of the lack of a personal

financial investment by a postenactment acquirer of

property, such as a donee, heir, or devisee.” 533 U.S.

at 635 (O’Connor, J., concurring).

In United States v. Causby, the Court held that the

state’s interference with an air easement (through

noisy flight paths) could alone effect a taking even

though the “[owner] does not occupy [the air above his

property] in a physical sense.” 328 U.S. 256, 264

(1946). In the Court’s estimation, “the flight of

airplanes, which skim the surface but do not touch it,

is as much an appropriation of the use of the land [as

a chicken farm] as a more conventional entry upon it,”

id., even if the owner still possesses the land, and,

perhaps as a last resort, may use the land for camping

or other recreational activities. See Lucas, 505 U.S. at

1044 (Blackmun, J., dissenting) (“Petitioner can

picnic, swim, camp in a tent, or live on the property in

a movable trailer.”).

Finally, in Loretto, the Court took a categorical

stance on permanent physical invasions, finding that

they were different in kind than other types of

takings. With a permanent physical occupancy, “the

government does not simply take a single ‘strand’

from the ‘bundle’ of property rights: it chops through

the bundle, taking a slice of every strand.” Loretto,

458 U.S. at 435. The Court distinguished between

temporary and permanent physical invasions and

found the latter more problematic. But the Court was

clear that past cases emphasized that “physical

invasion cases are special,” and that the relevant

question is whether the invasion can be deemed

permanent or temporary. Id. at 432.

13

The Court was right: physical invasions are

special and deserve a clear rule rather than a complex

balancing test. And because Seattle has extensive

eviction protections for tenants—including a “Just

Cause Eviction Ordinance” that provides only 18 “just

causes” for terminating a lease, Seattle Mun. Code §

22.206.160(C)—the city has delivered landlords a onetwo punch: forced to lease to unwanted tenants, then

forced to keep them on.

B. The Right to Exclude Unwanted

Tenants Is a Fundamental Ownership

Attribute That Should Be Analyzed

Categorically Rather Than

Incrementally

The Court should reject a Penn Central analysis

here because the moment the right to exclude is

compromised, even in a leasing context, it has “gone

too far.” “[An] essential element of individual property

is the legal right to exclude others from enjoying it.”

Int’l News Service v. Associated Press, 248 U.S. 215,

250 (1918) (Brandeis, J., dissenting). In Kaiser Aetna

v. United States, the Court “[held] that the ‘right to

exclude,’ so universally held to be a fundamental

element of the property right, falls within this

category of interests that the Government cannot

take without compensation.” 444 U.S. 164, 180 (1979).

If the government forced one person to live in your

home, it would be absurd to subject that deprivation

to an analysis of the extent to which a taking has

occurred. The taking is total, even though you can still

use the kitchen and even swim in the pool. The right

to exclude is not subject to such linear scaling; it is a

fundamental attribute of ownership.

14

The same holds true for a lessor. A landlord may

want to rent his property, but not to just anyone. Even

if a prospective tenant meets certain minimum

requirements, something about the tenant may cause

the landlord unease. Chong and MariLyn Yim, two of

the petitioners here, rent out the other two

apartments of the triplex where they live. Pet. Br. at

4. Because they have three small children, and the

residents share a courtyard, the Yims are

understandably concerned about the character of

their tenants. The law is meant to stop the landlord

from acting on those concerns, and in so doing

compromises the right to exclude lessees based on any

non-proscribed criteria. But, in some sense, that is the

sine qua non of property ownership: my house, my

rules. Perhaps you want to kick someone out of your

party because you don’t like the look on his face. You

can do that, and you don’t have to answer to anyone.

Courts’ analyses in takings cases typically include

both (1) purely legal and (2) economic (or “law and

economics”) considerations. The two will often inform

one another, but takings analysis shouldn’t rely too

much on complex economic analysis. Property, after

all, is a legal concept that has economic effects, and it

was deeply rooted in our nation’s history and

traditions before the modern concept of “economics”

was even conceived.

As in Lucas, the primacy of legal considerations

can sometimes cause “unfair” results. There, the

majority conceded that its reasoning meant that a

total (100 percent) loss of a property’s value was a “per

se taking,” whereas a loss of anything less (even 99

percent) would be subject to Penn Central’s “partial

takings” test. Lucas, 505 U.S. at 1016 n.7. But, to

15

ensure uniform application, a legal test must at some

point categorize analyzed objects, and Justice Scalia’s

line at 99.9 percent is in this vein. Discussing Penn

Central, Professor Eagle wrote that “the creation of

tautologies is a game that two can play”:

In response to the government’s assertion

that the landowner claims that “anything is

100% of itself,” the landowner might with

equal plausibility state that “almost anything

is but a small percentage of something almost

infinitely larger.”

Eagle, Regulatory Takings, at 807.

Diminution in value—and the debates over how to

measure the denominator—is not the end of all

takings-clause analysis, as those earlier cases show.

Other, purely legal, concerns do arise, and the

potential difficulty in measuring value in such cases

should not limit the application of bright-line rules,

where appropriate. Just because the dollar-value of

the “right to exclude others” from a vacant lot is not

as easy to determine as the fair market value of the

“parcel as a whole” does not mean that this right is no

less deserving of takings-clause protection. Hodel and

Kaiser Aetna speak to the primacy of legal concerns

over “balancing” purely economic considerations, such

as the reciprocity of advantage.

In Tahoe-Sierra, the majority followed the Lucas

total-loss approach, finding that a temporary

moratorium on development was not a taking because

it did not cause a permanent deprivation of all value.

535 U.S. at 334–35. The Court then repeated Andrus’s

admonition that “where an owner possesses a full

‘bundle’ of property rights, the destruction of one

16

‘strand’ of the bundle is not a taking.” Id. at 327

(quoting Andrus, 444 U.S. at 65–66). But TahoeSierra involved only the right to develop, which, as in

Lucas, elicits a primarily value-driven analysis. That

is unlike Hodel’s right to devise, which includes more

cultural considerations, such as the “the right to pass

on valuable property to one’s heirs,” which “is itself a

valuable right.” Hodel, 481 U.S. at 715. The right to

exclude unwanted tenants is much more like the right

to devise than the right to develop.

The key lesson from Tahoe-Sierra and Lucas is

that the state’s interference must be total in order to

effect a taking of the interest residing in the

interfered-with right. Put a different way, some rights

can be more easily measured incrementally, such as

the right to develop. Throughout the country, there

are myriad restrictions on the right to develop, and

those affect the value of millions of parcels of land. In

order to avoid complex and unwieldy line-drawing

problems, it makes some sense to have a version of

the “total taking” standard for the right to develop.

The right to exclude unwanted tenants, however, is

very different than the right to develop. It should be

looked at categorically rather than incrementally. In

the words of Professor Eagle:

[T]here is no precise way that the value of a

given set of restrictions to society might be

determined. There is no way, other than

accepting inherently self-serving testimony,

that the value of property to the present

owner could be determined. Absent these

things, ‘too far’ has to be expressed either in

terms of diminution in value from a specified

baseline or in terms of violation of the natural

17

law (as expressed in the idiom—either

substantive due process or fundamental

fairness—of the decision maker’s choice).

Eagle, Regulatory Takings, at 822–23.

The Court’s several nods to the conceptual

segmentation of property into individually protected

elements suggest it is receptive to treating the

deprivation of such “fundamental attributes” as per

se takings. Amici urge the Court to formally adopt

this line of reasoning, so that it analyzes any total

interferences—deprivations,

really—with

any

segment of the bundle of rights under a Loretto or

Lucas, rather than Penn Central, framework.

II. THIS CASE IS AN EXCELLENT VEHICLE

FOR REMOVING FUNDAMENTALATTRIBUTE TAKINGS FROM PENN

CENTRAL’S ANALYTICAL FRAMEWORK

This case offers the Court an excellent opportunity

to draw a line between deprivations and interferences

with “fundamental attributes” of ownership. First,

the “right to lease” is a non-possessory interest that,

if the Court agrees with amici’s proposal, will

properly expand the “per se takings” concept beyond

Lucas. Second, unlike in many takings cases, the facts

here are not fairly in dispute.

The relevant statute—Seattle Mun. Code §

14.08.050(A)(4) states that it is “unfair practice for a

person to fail to . . . offer tenancy . . . to the first

prospective occupant meeting all the screening

criteria[.]” The only exceptions from this rule is if the

unit is “legally” or “voluntarily” “set aside . . . to serve

vulnerable populations.” Id. The SMC limits the

18

“screening criteria” to those that do not offend its list

of “unfair practices.” Seattle Mun. Code § 14.08.030.

Therefore, the “screening criteria” used once the

listing is up will already embody Seattle’s publicpolicy choices. While the purpose behind the “first-intime” rule is commendable—to further reduce

discrimination in housing—its rigidity is too limiting.

It does not allow landlords any flexibility in making

reasonable post-listing judgments.

The court below relied on Tahoe-Sierra, finding it

“unlikely that Tahoe-Sierra would recognize

extraordinary circumstances”—“such as when a

permanent regulation provides that ‘no productive or

economically beneficial use of land is permitted’—are

present whenever a regulation limits ‘the right to

choose to whom one will rent their property.’” Chong

Yim, 194 Wn.2d at 669–70 (cleaned up).

But unlike in Tahoe-Sierra, the legislation here

does not provide that the interference is temporary.

Tahoe-Sierra might be an appropriate analogue if

Seattle’s Office of Civil Rights required a “first-intime” rule with exemptions from specific applications.

The city would also have the burden to prove its

rejection of an exemption was not capricious or

arbitrary. But the city instead saves itself significant

time and cost by permanently imposing on landlords

the burdens of its public-policy choices. Even under

Penn Central’s forgiving treatment, the “character of

the governmental action” “goes too far.”

In reviewing this case, the Court should also

consider the social and economic costs of rejecting the

petition. As housing regulations become more onerous

and complex, it will prove more difficult for small

19

landlords to keep up. Urban real estate markets will

become even more dominated by large, commercially

sophisticated landlords who can afford to navigate the

regulatory environment. Costs of living will increase,

pushing out lower-income residents. This in turn will

reduce economic and cultural diversity. If other cities

are given the green light to replicate Seattle’s efforts,

they will likely experience similar losses.

Even for commercially sophisticated landlords,

compliance costs would remain high, and would be

reflected in ever-increasing rents. In cities where such

increases are limited by rent controls, the profit

crunch could thus reduce real-estate competition,

reducing the quality of construction, maintenance,

and amenities to the absolute regulated limit.

CONCLUSION

When this Court decided Penn Central, historic

preservation laws were still in their infancy. Now

they have become a national trend and have led to a

host of ancillary legal controversies. See, e.g., J. Peter

Byrne, Historic Preservation and Its Culture

Despisers: Reflections on the Contemporary Role of

Preservation Law in Urban Development, Geo. Pub. L.

and Legal Research Paper No. 12-021 (2012). Some of

these might have been avoided had New York City’s

restrictions on Penn Central’s construction been

subjected to a bright-line test.

Lucas, in turn, involved a problem of a different

sort. It is rare, and obviously difficult, for

governments to totally diminish the value of land

through regulation. Instances of less-than-total

diminutions abound and remain subject to Penn

20

Central’s confusing directives. See generally Mark

Fenster, The Stubborn Incoherence of Regulatory

Takings, 28 Stan. Envtl. L.J. 525 (2009).

If ever the chance and need for a narrowing of

Penn Central arose, the Court would be remiss to

ignore it. This case presents a total deprivation of a

property right that cannot be as easily measured as a

total loss (as in Lucas), and should not be tested using

primarily economic metrics (as in Penn Central). But

the logic underlying Lucas remains, and ought to

apply in equal measure to a total deprivation of a nonpossessory property right as it does to one that is more

conventionally valuable—e.g., the “parcel as a whole.”

In addition to the important legal questions here,

an adverse outcome could impose huge social and

economic costs. Amici thus urge the Court to grant

certiorari and protect the “fundamental attributes” of

ownership from state overreach, to ensure that a

regulation that “goes too far” cannot go national.

Respectfully submitted,

Manuel S. Klausner

Ilya Shapiro

LAW OFFICES OF MANUEL S.

KLAUSNER

Wells Fargo Center

333 S. Grand Ave., Suite 4200

Los Angeles, CA 90071

(213) 617-0414

mklausner@klausnerlaw.us

Counsel of Record

Trevor Burrus

Sam Spiegelman

CATO INSTITUTE

1000 Mass. Ave., N.W.

Washington, D.C. 20001

(202) 842-0200

ishapiro@cato.org

April 10, 2020