Amicus Curiae Brief — G-Max Management, Inc., et al., Petitioners v. New York, et al.

Supreme Court briefMay 23, 2024

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No. 23-1148

IN THE

Supreme Court of the United States

G-MAX MANAGEMENT, INC., ET AL.,

Petitioners,

STATE OF NEW YORK, ET AL.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Second Circuit

BRIEF OF THE CHAMBER OF COMMERCE OF

THE UNITED STATES OF AMERICA AS

AMICUS CURIAE SUPPORTING

PETITIONERS

ANDREW R. VARCOE

TYLER S. BADGLEY

U.S. CHAMBER LITIGATION

CENTER

1615 H Street, NW

Washington, DC 20062

WILLIAM M. JAY

Counsel of Record

BENJAMIN HAYES

GOODWIN PROCTER LLP

1900 N Street, NW

Washington, DC 20036

(202) 346-4000

wjay@goodwinlaw.com

Counsel for Amicus Curiae

May 23, 2024

TABLE OF CONTENTS

Page

INTEREST OF THE AMICUS CURIAE................... 1

INTRODUCTION AND SUMMARY OF

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

ARGUMENT .............................................................. 6

This Court Should Review And

Reverse The Second Circuit’s Dilution

Of The Per Se Takings Rule. ......................... 6

A. Property Owners Count On The

Per Se Rule: Government Cannot

Physically Occupy Private

Property Without Paying For It. ............ 6

B. The Second Circuit’s Constricted

View Of Per Se Takings Dilutes

Property Rights And Fosters

Uncertainty .......................................... 10

II.

The Second Circuit’s RegulatoryTakings Holding Also Warrants This

Court’s Review. ............................................ 16

A. The Court Should Reaffirm That A

Taking Occurs When The

Government Tries To Shift The

Cost Of Curing Social Problems

Onto Private Entities That Did

Not Cause Them.................................... 17

B. The Second Circuit’s Diminished

Version Of This Court’s

Regulatory-Takings Jurisprudence

Urgently Needs Correction. .................. 20

CONCLUSION ......................................................... 22

TABLE OF AUTHORITIES

Page(s)

Cases:

74 Pinehurst LLC v. New York,

601 U.S. __ (Feb. 20, 2024) (Thomas, J.,

statement respecting denials of certioari) ..... 3, 6

74 Pinehurst LLC v. New York,

59 F.4th 557 (2d Cir. 2023) ........................... 3, 21

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

568 U.S. 23, 31-32 (2012) .................................... 9

Armstrong v. United States,

364 U.S. 40 (1960) ................................... 5, 17, 18

Bridge Aina Le’a, LLC v. Haw. Land Use

Comm’n,

141 S. Ct. 731 (2021) ....................................... 3, 8

Cedar Point Nursery v. Hassid,

594 U.S. 139 (2021) .......................... 1-3, 6-7, 9-15

Community Housing Improvement Program

v. City of New York,

59 F.4th 540 (2d Cir. 2023) ........................... 3, 21

Concrete Pipe & Prods. of Cal., Inc. v.

Constr. Laborers Pension Tr. for S. Cal.,

508 U.S. 602 (1993) ........................................... 20

Dolan v. City of Tigard,

512 U.S. 374 (1994) ........................................... 18

iii

E. Enters. v. Apfel,

524 U.S. 498 (1998) ............................................. 8

First English Evangelical Lutheran Church

of Glendale v. Cnty. of L.A.,

482 U.S. 304 (1987) ............................................. 8

Horne v. Dep’t of Agric.,

576 U.S. 350 (2015) ......................... 1, 7, 9, 14, 15

Loretto v. Teleprompter Manhattan

CATV Corp.,

458 U.S. 419 (1982) ........................... 9, 10, 13, 15

Lucas v. S.C. Coastal Council,

505 U.S. 1003 (1992) ......................................... 10

Nollan v. California Coastal Comm’n,

483 U.S. 825 (1987) ........................................... 18

Penn Central Transp. Co. v. City of N.Y.,

438 U.S. 104 (1978) ............................. 5, 7, 20, 21

Pennell v. City of San Jose,

485 U.S. 1 (1988) ........................................... 5, 17

PruneYard Shopping Center v. Robins,

447 U.S. 74 (1980) ............................................. 15

Sheetz v. County of El Dorado,

California,

601 U.S. 267 (2024) ....................... 1, 5, 10, 17, 19

Tyler v. Hennepin County,

598 U.S. 631 (2023) ........................................... 17

Yee v. City of Escondido,

503 U.S. 519 (1992) ....................................... 7, 14

Other Authorities:

Steven N. Berger, Access for CATV Meets

the Takings Clause: The Per Se Takings

Rule of Loretto v. Teleprompter

Manhattan CATV Corp., 25 Ariz. L. Rev.

689 (1983) ....................................................... 9-10

J. Peter Byrne, Ten Arguments for the

Abolition of the Regulatory Takings

Doctrine, 22 Ecology L.Q. 89 (1995) ................... 8

Steven J. Eagle, The Four-Factor Penn

Central Regulatory Takings Test, 118

Penn St. L. Rev. 601 (2014) ................................ 8

Carol M. Rose, Mahon Reconstructed: Why

the Takings Issue is Still a Muddle, 57 S.

Cal. L. Rev. 561 (1984) ........................................ 8

Joseph Story, Commentaries on the

Constitution of the United States (4th ed.

1873) .................................................................... 6

INTEREST OF THE AMICUS CURIAE1

The Chamber of Commerce of the United States of

America is the world’s largest business federation. The

Chamber represents approximately 300,000 direct

members and indirectly represents the interests of

more than three million companies and professional

organizations of every size, in every industry sector,

and from every region of the country. An important

function of the Chamber is to represent the interests of

its members in matters before Congress, the Executive

Branch, and the courts.

The Chamber regularly files amicus curiae briefs in

cases, like this one, that raise issues of concern to the

Nation’s business community, including cases defending constitutional protections for private property

rights against government infringement. To that end,

the Chamber has filed amicus briefs supporting property owners in cases such as Horne v. Department of

Agriculture, 576 U.S. 350 (2015), Cedar Point Nursery

v. Hassid, 594 U.S. 139 (2021), and Sheetz v. County of

El Dorado, 601 U.S. 267 (2024). The Chamber also

filed amicus briefs in support of petitions seeking review of the Second Circuit’s prior decisions rejecting

Takings Clause challenges to New York’s Rent Stabilization Law—the same law at issue in this case. See

Community Housing Improvement Program v. City of

New York, No. 22-1095; 74 Pinehurst LLC v. State of

New York, No. 22-1130.

1 No counsel for any party authored this brief in whole or in part

and no entity or person, aside from amicus curiae, its members, or

its counsel, made any monetary contribution intended to fund the

preparation or submission of this brief. All parties received timely

notice of amicus’s intent to file this brief.

The Chamber has a strong interest in the issues in

this case. American businesses rely on stable, fair, and

predictable property rules—including in the area of

takings law. The decision below is therefore of significant practical concern to the Chamber and its members, which have a substantial interest in ensuring

that property owners retain an adequate, efficient, and

prompt remedy against government takings of property. The Second Circuit’s decision in this case further

entrenches its precedent that undermines Fifth

Amendment protections against uncompensated government occupation and confiscation of property, with

wide-ranging consequences for business interests and

private-property holders nationwide.

INTRODUCTION AND

SUMMARY OF ARGUMENT

“The right to exclude” is the “most treasured” of

property rights. Cedar Point Nursery v. Hassid, 594

U.S. 139, 149 (2021) (citation omitted). Petitioners’

right to exclude has been taken. Their property is being locked up by law to house strangers indefinitely.

Yet the Second Circuit held that they have no viable

takings claim of any stripe. This Court should grant

certiorari.

New York’s Rent Stabilization Law (“RSL”) imposes

significant restrictions on landlords’ ability to control

their properties, including (a) requiring landlords, except in narrow circumstances, to renew leases in perpetuity (even for strangers to the lease); (b) barring landlords from reclaiming possession of their properties for

personal use absent an “immediate and compelling necessity”; (c) restricting landlords’ ability to convert

their rental units to cooperatives or condominiums;

and (d) prohibiting landlords from raising rents upon

vacancy to factor in rising costs or to pay for needed

improvements. Pet. 5-10. Applying its precedent in

Community Housing Improvement Program v. City of

New York, 59 F.4th 540 (2d Cir. 2023) (CHIP), cert. denied, 144 S. Ct. 264 (2023), and 74 Pinehurst LLC v.

New York, 59 F.4th 557 (2d Cir. 2023), cert denied,

2024 WL 674658 (Feb. 20, 2024), the Second Circuit in

this case held that the RSL does not constitute a per se

or regulatory taking of petitioners’ properties. The rationale of the decision below and the circuit precedent

it applied weaken property rights well beyond the

boundaries of New York and empower the government

to shift the cost of remedying social ills onto private

parties. These issues are “important” and warrant this

Court’s review, as to both per se and regulatory takings. See 74 Pinehurst LLC v. New York, 601 U.S. __

(slip op., at 1, 2) (Feb. 20, 2024) (Thomas, J., statement

respecting denials of certiorari).

I. Physical invasions of private property by government are per se takings, and the government has a

“clear and categorical obligation” to pay just compensation for such invasions. Cedar Point Nursery, 594 U.S.

at 147. That guarantee is what enables property owners to finance, invest in, and improve their properties:

they can be confident (and, therefore, lenders and other

investors can be confident) that the fruits of their efforts and expense will not be confiscated for public use

without compensation. By contrast, once those invasions are treated as just another regulatory taking, any

hope of compensation becomes faint at best, thanks to

the “vague and indeterminate” standard currently governing regulatory-takings claims, which no one “has

any idea how to apply.” Bridge Aina Le’a, LLC v. Haw.

Land Use Comm’n, 141 S. Ct. 731, 731-732 (2021)

(Thomas, J., dissenting from the denial of certiorari)

(citation omitted).

The Second Circuit held that just by becoming landlords, petitioners forfeited a per se takings claim. That

is an extraordinary constriction of the per se rule that

government-imposed occupation requires compensation. Leasing a single apartment to a specific individual for a short, defined period now justifies permanent

or indefinite impairment of the right to exclude. New

York allows landlords no meaningful way out, and the

Second Circuit allows them no compensation. The

court’s rationale will have far-reaching negative consequences, as it threatens to justify permanent, government-backed occupation of all kinds of private property—from rental cars to cloud storage.

This Court’s review is needed now. The Second Circuit has created a massive disincentive for anyone considering putting property to productive use. Other jurisdictions have taken, or are pursuing, steps to enact

similar restrictions into law. See p. 16, infra. The Second Circuit’s decisions will only embolden additional

governments to follow suit. The Court should not allow

these intrusions on private property and the Second

Circuit’s dilution of the per se takings doctrine to be

replicated nationwide.

II. This case also presents a prime opportunity for

the Court to clarify its regulatory-takings jurisprudence and to place meaningful limits on governments’

ability to compel private parties to foot the bill to alleviate public harms they did not cause.

“By requiring the government to pay for what it

takes, the Takings Clause saves individual property

owners from bearing ‘public burdens which, in all fair-

ness and justice, should be borne by the public as a

whole.’” Sheetz v. Cnty. of El Dorado, 601 U.S. 267,

273-274 (2024) (quoting Armstrong v. United States,

364 U.S. 40, 49 (1960)). That principle requires compensation when the government regulates private

property in the absence of a “cause-and-effect relationship between the property use restricted by the regulation and the social evil that the regulation seeks to

remedy.” Pennell v. City of San Jose, 485 U.S. 1, 20

(1988) (Scalia, J., concurring in part and dissenting in

part). The RSL violates that principle by converting

New York’s limited and ostensibly temporary rent- and

eviction-control rules into what is effectively a permanent and sweeping affordable housing program designed to remedy social ills not caused by the property

owners the RSL regulates. The Court should take this

opportunity to reaffirm the prohibition on governments

shifting the costs of social projects onto private parties

without compensation.

This case also presents the opportunity to correct

lower courts’ misunderstanding of the regulatorytakings doctrine more generally. Although the Second

Circuit purported to apply this Court’s decision in Penn

Central Transportation Co. v. City of New York, 438

U.S. 104 (1978), its expansive interpretation of that decision demonstrates that, in practice, Penn Central has

become little more than a blank check for governments

to impose broad categories of costly and burdensome

regulation without any realistic prospect of having to

pay compensation. This Court’s intervention is needed

to prevent the protections of Penn Central from being

rendered altogether toothless.

ARGUMENT

This Court Should Review And Reverse

The Second Circuit’s Dilution Of The Per

Se Takings Rule.

Following its precedent, the Second Circuit has once

again grievously erred in holding that the RSL’s onerous restrictions do not effect a per se taking under the

Fifth Amendment. By holding that a property owner

can forfeit the protection of the per se takings doctrine

simply by engaging in ordinary economic activity, the

Second Circuit allowed governments to legislate the

indefinite occupation of private property without compensation. Allowing that threat to hang over property

owners undermines the security of property rights and

discourages investment. The Court should grant review to address this “important” issue and correct the

court of appeals’ error. See 74 Pinehurst, slip op., at 1,

2 (Thomas, J., statement respecting denials of certiorari).

A. Property Owners Count On The Per Se

Rule: Government Cannot Physically

Occupy Private Property Without Paying

For It.

“As John Adams tersely put it, ‘[p]roperty must be

secured, or liberty cannot exist.’” Cedar Point Nursery,

594 U.S. at 147 (quoting Discourses on Davila, in 6

Works of John Adams 280 (C. Adams ed. 1851)). Our

Constitution provides that security by guaranteeing

just compensation when government takes private

property for public use—“an affirmance of a great doctrine established by the common law for the protection

of private property.” 2 Joseph Story, Commentaries on

the Constitution of the United States 547 (4th ed. 1873).

This fundamental protection—that the “government

must pay for what it takes,” Cedar Point Nursery, 594

U.S. at 148—gives property owners certainty in their

ownership. For instance, businesses that own property

can invest in improvements because they know that

the fruits of their labors and expense will not disappear overnight through government confiscation. But

that certainty would erode if government could take

effective possession without paying. That is why this

Court has consistently treated government-authorized

physical invasions of property as per se takings, rather

than subjecting them to the complex, fact-intensive inquiry that applies to government regulations affecting

the use of private property. When it comes to outright

occupation, only the per se rule offers property owners

the robust guarantee of compensation necessary to fully secure their property rights.

1. Physical invasions of property are per se takings.

The Second Circuit, however, held that this rule has no

relevance here and instead applied this Court’s regulatory-takings jurisprudence. But that body of law applies to claims that the government has taken property

by “restrict[ing] an owner’s ability to use his own property.” Cedar Point Nursery, 594 U.S. at 148. This

Court has subjected that type of takings claim to an

“essentially ad hoc, factual inquir[y],” Penn Cent.

Transp. Co., 438 U.S. at 124, which requires courts to

undertake “complex factual assessments of the purposes and economic effects of government actions,” Yee v.

City of Escondido, 503 U.S. 519, 523 (1992), and to

grapple with whether “a restriction on the use of property went ‘too far,’” Horne v. Dep’t of Agric., 576 U.S.

350, 360 (2015) (citation omitted). “As one might imagine, nobody—not States, not property owners, not

courts, nor juries—has any idea how to apply this

standardless standard.” Bridge Aina Le’a, 141 S. Ct. at

731 (Thomas, J., dissenting from the denial of certiorari); accord First English Evangelical Lutheran Church

of Glendale v. Cnty. of L.A., 482 U.S. 304, 340 n.17

(1987) (Stevens, J., dissenting) (describing regulatorytakings jurisprudence as “open-ended and standardless”).2

As currently applied, that ad hoc, fact-intensive inquiry is neither predictable nor certain. Cases applying it are “among the most litigated and perplexing in

current law.” E. Enters. v. Apfel, 524 U.S. 498, 541

(1998) (Kennedy, J., concurring in the judgment and

dissenting in part). A property owner navigating that

complex framework simply has no reliable way to assess the likelihood of receiving compensation. And the

continued lack of clarity in this Court’s regulatorytakings jurisprudence fosters a constant stream of unpredictable decisions—further increasing the price-tag

for businesses seeking to vindicate their property

rights.

2. In sharp contrast, this Court’s per se takings

doctrine provides a bedrock of clarity for property own2 See also, e.g., Steven J. Eagle, The Four-Factor Penn Central

Regulatory Takings Test, 118 Penn St. L. Rev. 601, 602 (2014) (describing regulatory-takings doctrine as “a compilation of moving

parts that are neither individually coherent nor collectively compatible”); J. Peter Byrne, Ten Arguments for the Abolition of the

Regulatory Takings Doctrine, 22 Ecology L.Q. 89, 102 (1995) (describing regulatory-takings jurisprudence as having “generated a

plethora of inconsistent and open-ended formulations that have

failed to make sense”); Carol M. Rose, Mahon Reconstructed: Why

the Takings Issue is Still a Muddle, 57 S. Cal. L. Rev. 561, 562

(1984) (“[C]ommentators propose test after test to define ‘takings,’

while courts continue to reach ad hoc determinations rather than

principled resolutions.”).

ers. Simply put: when the government “physically acquires private property for a public use”—whether by

using “its power of eminent domain to formally condemn property,” by “physically tak[ing] possession of

property without acquiring title to it,” or by “occup[ying] property” in some other way—“the Takings

Clause imposes a clear and categorical obligation to

provide the owner with just compensation.” Cedar

Point Nursery, 594 U.S. at 147-148. In those circumstances, the ad hoc inquiry under the regulatorytakings doctrine “has no place,” id. at 149; the “invariable rule[]” recognizes a taking and requires compensation. Ark. Game & Fish Comm’n v. United States, 568

U.S. 23, 31-32 (2012).

The Court has repeatedly applied this “clear and

categorical” rule to deem physical invasions of property

to be takings. See Loretto v. Teleprompter Manhattan

CATV Corp., 458 U.S. 419, 423-424, 434-435, 438

(1982) (holding that a law requiring landlords to allow

cable companies to install equipment on their buildings

was a per se taking); Horne, 576 U.S. at 355, 357-362

(holding that a law requiring raisin growers to set

aside a certain percentage of their harvest was a per se

taking); Cedar Point Nursery, 594 U.S. at 147-152

(holding that a law requiring property owners to allow

union officials on their premises for a certain amount

of time was a per se taking).

This “simple, per se rule,” Cedar Point Nursery, 594

U.S. at 148, offers the predictability and certainty lacking in current regulatory-takings jurisprudence—

serving as a “ray of light in the otherwise shadowy areas of ‘takings’ law.” Steven N. Berger, Access for

CATV Meets the Takings Clause: The Per Se Takings

Rule of Loretto v. Teleprompter Manhattan CATV

Corp., 25 Ariz. L. Rev. 689, 703 (1983). The per se rule

allows businesses and other property owners to invest

in and manage their properties secure in the

knowledge that any government invasion will require

“compensat[ion] … at fair market value,” Sheetz, 601

U.S. at 273—regardless of the scope or extent of the

physical occupation, Loretto, 458 U.S. at 438 n.16, and

“no matter how weighty the public purpose behind it,”

Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015

(1992). And if the government refuses to pay, securing

compensation is a relatively straightforward matter,

without the costly complexity that a regulatory-takings

challenge entails.

In short, the per se rule is a straightforward one:

Occupation requires compensation. That clear rule enables businesses and other property owners to use, develop, and invest in their properties.

B. The Second Circuit’s Constricted View Of

Per Se Takings Dilutes Property Rights

And Fosters Uncertainty.

The Second Circuit’s decision and the circuit precedent it applied undermine this Court’s per se takings

rule, by refusing to apply it in precisely the context in

which it is most appropriate—a physical invasion of

private property. See Cedar Point Nursery, 594 U.S. at

147-148. The result is the degradation of that “most

treasured” of property rights—“[t]he right to exclude.”

Id. at 149 (citation omitted). If not corrected, the Second Circuit’s precedent will have far-reaching negative

effects and will incentivize other governments to adopt

similarly intrusive laws. The potential that other

courts will follow the Second Circuit’s lead will diminish owners’ incentives to put their properties to productive use—unless this Court steps in.

1. The decision below does not seriously dispute

that the RSL entails physical occupations of private

property for public use. For example, the RSL’s provision for the indefinite renewal of leases and its prohibition on landlords’ reclaiming rental units for personal

use mean that the government-favored occupants can

stay permanently. Pet. 6. Yet the Second Circuit

treated the RSL’s restrictions as mere regulations on

the use of property—rather than physical takings.

That was largely because petitioners voluntarily entered into limited-term leases sometime in the past.

See Pet. App. 6. On the Second Circuit’s reasoning,

that was enough to surrender the Takings Clause’s

protection against physical occupation—the right to

exclude is gone, and on top of that, the government

strictly controls the rent the property owner may

charge. And those controls persist even after a tenant

has voluntarily vacated the premises. Pet. 7. There is

no exit. Even if the government-controlled rent makes

the enterprise unsustainable, property owners are left

with no way to regain the right to exclude. That

sweeping rationale will have damaging ramifications

for businesses and the security of their property rights

outside this particular context—undermining the important values of predictability and clarity that the per

se rule fosters, and relegating property owners to the

costly, inefficient, and unpredictable tangle of the regulatory-takings jurisprudence.

In any jurisdiction that follows the Second Circuit’s

reasoning, merely entering the rental market to any

degree or in any context will mean passing the point of

no return. Governments will be free to intrude on virtually any rental property, both real and personal,

without the “clear and categorical obligation to provide

the owner with just compensation,” Cedar Point Nurse-

ry, 594 U.S. at 147—simply because the property owner initially granted a limited license to a third party. It

makes no difference how fleeting or restricted the invitation; under Second Circuit precedent, any property

owner that invites third parties onto its property automatically has opened itself up to a permanent government-mandated expansion of that limited license,

with no recourse to the important protections of the per

se takings rule.

That reasoning has dangerous implications for numerous other segments of the economy besides real estate. For example, the government could require a

rental car company to permanently lease its vehicles to

existing or future renters, without effecting a physical

taking, so long as the lessee paid some amount of

rent—controlled, of course, by the government. That

same dynamic could carry over to a host of other business arrangements—such as the leasing of construction equipment, cloud storage, or air rights.

All these property owners (and more) will, under

the Second Circuit’s rule, be deemed to have relinquished the important protections of the per se takings

rule and opened themselves up to permanent occupation of their property—and the risk of being forced to

operate at a loss for the benefit of their governmentfavored renters—merely for having granted a limited

license to select members of the public at one point in

time.

2. This Court’s decisions illustrate why the Second

Circuit was wrong to conclude that property owners

relinquish their right to exclude unless they categorically exclude everyone. For example, in Loretto this

Court held that the government effected a per se taking

by requiring landlords to allow cable companies to in-

stall equipment on their properties. 458 U.S. at 423.

Under the Second Circuit’s rationale, if a building

owner had allowed any equipment to be installed on

the premises, even temporarily, the government could

have mandated that it allow the cable equipment without having effecting a per se taking. Or consider Cedar

Point Nursery, in which the Court found a per se taking

where the government required an agricultural business to allow union officials on its property for up to

three hours per day, 120 days a year. 594 U.S. at 143145. By the Second Circuit’s reasoning, if Cedar Point

Nursery had voluntarily allowed union officials onto its

premises for one hour a year, the government could

have imposed the exact same requirement at issue in

that case, but without a physical taking having occurred. Neither can be correct: “The right of a property owner to exclude a stranger’s physical occupation of

his land cannot be so easily manipulated.” Loretto, 458

U.S. at 439 n.17; see also Cedar Point Nursery, 594

U.S. at 155 (same).

In fact, this Court has already rejected nearly identical reasoning. In Loretto, the Court dismissed the argument that the government’s actions were not a physical taking because the landlord could avoid the regulation by exiting the rental-property market, an option

that does not meaningfully exist under the RSL. 458

U.S. at 439 n.17 (“[A] landlord’s ability to rent his

property may not be conditioned on his forfeiting the

right to compensation for a physical occupation.”). In

other words, a landlord’s voluntary decision to enter

the rental market does not give the government license

to occupy its property for free. The Court reaffirmed

that principle in Horne—holding that the Horne family

did not forfeit a per se takings claim by choosing to sell

raisins, rather than using their grapes for another

purpose (e.g., making wine) outside the scope of the

challenged government order. See 576 U.S. at 365. So

too here: Petitioners did not relinquish the protections

of the per se takings rule by engaging in a business the

government has chosen to regulate.

3. Following the lead of CHIP and 74 Pinehurst,

the Second Circuit decision below relied on Yee v. City

of Escondido, supra, to sidestep this Court’s decisions

in Horne and Cedar Point Nursery—reasoning that

“neither concerns a statute that regulates the landlordtenant relationship.” Pet. App. 6, 7 (citation and internal quotation marks omitted). That is a misreading of

Yee (Pet. 18-19), and, in any event, is irreconcilable

with this Court’s later decisions in Horne and Cedar

Point Nursery. As those later decisions illustrate, the

force of the physical takings rule does not wax and

wane depending on the identity of the property owner

who is the target of government confiscation. Whether

the property be raisins or rental units, the rule is the

same: “the Takings Clause imposes a clear and categorical obligation to provide the owner with just compensation” whenever “the government physically acquires private property for public use.” Cedar Point

Nursery, 594 U.S. at 147 (emphasis added).

CHIP and 74 Pinehurst assumed that a history of

government regulation in a particular area can defeat

this categorical rule, but that misunderstands the

function of the Takings Clause and is a recipe for diluting property rights. The Takings Clause is not a bar

on government regulation; it only dictates that when

government regulates in a particular way (by taking

private property), it has a “clear and categorical obligation to provide the owner with just compensation.” Cedar Point Nursery, 594 U.S. at 147. Thus, the fact of

regulation (even extensive regulation) in a particular

commercial context is no reason to deem the protections of the per se takings rule inapplicable. For example, in both Horne and Cedar Point Nursery, the commercial activity involved had long been subject to regulation. See Horne, 576 U.S. at 355 (regulation of agriculture dating back to 1937); Cedar Point Nursery, 594

U.S. at 144 (regulation of labor relations dating back to

1975). Nonetheless, the Court found the government’s

efforts to invade private property to be per se takings,

without any indication that decades of prior regulation

diminished the applicability of that doctrine.

The RSL’s provision for uncompensated physical invasions of petitioners’ properties cannot be justified on

the theory that those properties are open to the public—like the shopping center in PruneYard Shopping

Center v. Robins, 447 U.S. 74 (1980), and unlike in

Horne and Cedar Point Nursery. The shopping center

in PruneYard welcomed some 25,000 patrons per day.

See 447 U.S. at 77-78. Renting a single apartment to a

particular tenant for a limited time is the exact opposite of an open invitation to the public. Indeed, if it

were otherwise, this Court’s decision in Loretto could

not have come out as it did, as the plaintiff in that case

owned and rented units in a five-story apartment

building. 458 U.S. at 421-422.

The decision below and the circuit precedent that

“dictate[d]” its outcome (Pet. App. 7) impermissibly

barred property owners engaged in common forms of

economic activity from receiving compensation for

physical takings. That is significant not only within

the Second Circuit, but throughout the country. The

Second Circuit excused the RSL from the per se rule

based on decisions that property owners made well before the 2019 amendments to the RSL were even proposed. Thus, any property owner in a jurisdiction that

might follow the Second Circuit’s rule is already seeing

the certainty of its property rights erode: remaining in

the rental market today, or entering the market even

as a tentative experiment, could mean living with an

unwelcome tenant indefinitely. This Court should

grant certiorari to prevent those harms from proliferating nationwide.

The risk of that contagion is high. As the petition

explains, other jurisdictions have enacted or are considering enacting similar laws governing rental properties. Pet. 30 (collecting laws). The Second Circuit’s decisions will encourage more governments to follow suit

and to be even more aggressive in restricting property

rights each time they do—confident that property owners wishing to obtain compensation will face the high

cost and uncertainty of the existing regulatory-takings

jurisprudence. The Court should grant review to ensure that those harms do not take root and the Takings

Clause does not become a mere parchment guarantee.

II.

The Second Circuit’s Regulatory-Takings

Holding Also Warrants This Court’s

Review.

The Second Circuit’s distortion of the physical takings doctrine is reason enough to grant the petition

and reverse the decision below. But the court’s ruling

on petitioners’ regulatory-takings claim likewise warrants this Court’s review, as it offers the Court a prime

opportunity to provide much-needed clarity in this area

of takings law and to impose meaningful limits on governments’ ability to shift the cost of redressing public

problems on private parties that did not cause those

harms. Granting both questions would also compel respondents to defend the complete denial of compensation here, rather than resist the per se holding while

hinting that perhaps some future ideal plaintiff might

win under Penn Central. Recently, in Tyler v. Hennepin County, 598 U.S. 631 (2023), the Court granted

both questions presented (one addressing the Takings

Clause and one the Excessive Fines Clause), even

though the takings argument was sufficient for reversal. The Court should likewise grant certiorari on both

questions here.

A. The Court Should Reaffirm That A Taking

Occurs When The Government Tries To

Shift The Cost Of Curing Social Problems

Onto Private Entities That Did Not Cause

Them.

The Takings Clause embodies the bedrock principle

that the government cannot “forc[e] some people alone

to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Armstrong, 364 U.S. at 49; see also Sheetz, 601 U.S. at 273274 (same). As Justice Scalia explained in his concurring and dissenting opinion in Pennell v. City of San

Jose, joined by Justice O’Connor, whether a burden is

“public”—and therefore one that the public must pay to

alleviate—must be determined by assessing whether

there is a “cause-and-effect relationship between the

property use restricted by the regulation and the social

evil that the regulation seeks to remedy.” 485 U.S. at

20.

The RSL’s draconian restrictions conspire to violate

this principle. That law grants tenants and their “successors” (even non-relatives) an automatic right of renewal in perpetuity (Pet. 6); curtails landlords’ ability

to reclaim their properties for personal use absent an

“immediate and compelling necessity” (id.); dictates

that landlords obtain purchase agreements from a majority of existing tenants before converting rental property into condominiums (id. at 7); and strictly limits

rent increases, even to account for inflation and necessary improvements (id. at 8). In effect, the RSL creates

a permanent affordable housing program for millions of

New Yorkers and shifts the cost of that program onto

individual landlords, who are simply not responsible

for the market and other forces that are driving up

rent. That constitutes a regulatory taking: the landlords are being forced to bear a “public burden[],” Armstrong, 364 U.S. at 49, which they did not create.

The principle articulated by Justice Scalia and Justice O’Connor in Pennell has been applied by this Court

in cases that remain good law. In Nollan v. California

Coastal Commission, 483 U.S. 825 (1987)—decided a

year before Pennell—the Court addressed whether a

government could condition approval of a building

permit for construction of a beachfront home on the

property owners’ granting a public “easement to pass

across a portion of their property.” Id. at 828. The

Court observed that the government could permissibly

impose conditions that directly redress a harm caused

by the permitted use. But the “evident constitutional

propriety disappears … if the condition … utterly fails”

to redress the problem caused by the property. Id. at

837. In that case, the Court held, the condition constitutes a taking—an effort to “obtain[] an easement to

serve some valid governmental purpose, but without

payment of compensation.” Id.; see also Dolan v. City

of Tigard, 512 U.S. 374, 381-382, 394, 396 (1994) (holding that a city violated the Takings Clause by conditioning approval of a development on the landowner’s

converting part of its property into a greenway and

granting the city a public recreational easement, where

the proposed development did not encroach on existing

greenway).

Sheetz reaffirmed that the rule of Nollan and Dolan

applies equally to conditions imposed on the use of

property, not just to “ad hoc” permit conditions. 601

U.S. at 271. The Court reiterated that the government

may impose conditions to address a problem caused by

a proposed use—e.g., requiring a landowner to “deed

over the land needed to widen a public road” as a condition for “a proposed development [that] will ‘substantially increase traffic congestion.’” Id. at 274-275 (citation omitted). But when the government seeks to impose conditions on land use that are “unrelated” to the

proposed use, or that are otherwise disproportionate,

the imposition “amount[s] to ‘an out-and-out plan of

extortion,’” which the Takings Clause forbids absent

the payment of compensation. Id. at 275 (citation

omitted).

Although these cases involved unconstitutionalconditions claims, the theory of takings law underlying

those decisions is the same theory embraced by Justice

Scalia and Justice O’Connor in Pennell—a government

regulation is a taking if it seeks to burden a private entity’s property to alleviate a social problem not attributable in any sense to that property. That principle deserves to be restored to prominence in this

Court’s regulatory-takings jurisprudence.

The need for that correction is particularly pressing

now, as governments across the country are engaged in

renewed efforts to impose rent controls, see Pet. 30,

and may seek to emulate the RSL specifically. The

Court should grant review to ensure that its regulato-

ry-takings jurisprudence is not a dead letter and that

governments do not have free rein to shift the costs of

public benefits onto private parties.

B. The Second Circuit’s Diminished Version

Of This Court’s Regulatory-Takings

Jurisprudence Urgently Needs Correction.

This Court’s review is also warranted to restore

some clarity to the Penn Central analysis. The amorphousness of that line of cases has led courts to exclude

vast swaths of onerous government regulation from the

Takings Clause’s protection. See pp. 7-8, supra. The

decisions below only exacerbate those problems.

Take the Second Circuit’s application of the first

Penn Central factor—the “economic impact of the regulation on the claimant.” 438 U.S. at 124. The court of

appeals acknowledged that petitioners had alleged

“specific facts … tending to show a negative economic

impact due to the [RSL].” Pet. App. 11. Nonetheless,

the court dismissed these severe economic harms on

the theory that “loss of profit” and “diminution in the

value of property” are insufficient—“however serious”

they might be. Pet. App. 11 (emphasis added) (citations omitted). That rationale—that even the most

devastating of economic harms is insufficient under a

factor designed to assess the “economic impact” on the

regulated party—guts this inquiry of any meaning.

That the Second Circuit believed itself constrained to

take this position by this Court’s precedents only underscores the need for this Court to intervene. See Pet.

App. 11 (quoting Concrete Pipe & Prods. of Cal., Inc. v.

Constr. Laborers Pension Tr. for S. Cal., 508 U.S. 602,

645 (1993)).

Or consider the Second Circuit’s treatment of the

second Penn Central factor—the interference with “investment-backed expectations.” 438 U.S. at 124. The

court reasoned that because New York has long regulated rental properties, petitioners should “have anticipated” that “those regulations … could change yet

again.” Pet. App. 12 (quoting 74 Pinehurst, 59 F.4th at

567). Yet the court simply ignored that the premise of

petitioners’ regulatory-takings theory is that the recent

amendments to the RSL were a shift in kind, not merely degree, from the prior restrictions. See Pet. 22. Under the Second Circuit’s theory, no matter how dramatically a new government regulation departs from the

status quo, the answer is always the same in any regulated area of the economy.

The court of appeals’ application of the third Penn

Central factor—the “character of the governmental action,” 438 U.S. at 124—is equally problematic. This

factor is designed to differentiate between government

“interference” that “can be characterized as a physical

invasion” of property, rather than an effort to “adjust[]

the benefits and burdens of economic life to promote

the common good.” Id. But despite the clear physical

nature of the RSL’s mandates, the Second Circuit held

that the character of the RSL’s restrictions nonetheless

weighed against finding a regulatory taking merely because the RSL is “concerned with ‘broad public interests.’” Pet. App. 12 (quoting CHIP, 59 F.4th at 555).

That re-conception drains the third Penn Central factor

of any substance. After all, most government action

could be said to advance some important public interest—and courts typically defer to legislatures on those

judgments. The Second Circuit’s rationale thus twists

this factor into a blank check for government regula-

tion, rather than a tool for assessing the parallels between the government’s action and physical invasions.

Without this Court’s intervention, the confusion in

regulatory-takings doctrine will persist, and the Penn

Central analysis will continue to be used to insulate

substantial amounts of onerous government regulation

from the important protections of the Takings Clause,

while enabling governments to continually shift the

cost of alleviating public harms onto private parties in

no way responsible for the ills being redressed. The

Court should grant review to correct the Second Circuit’s misunderstanding of the Takings Clause’s protection against uncompensated regulatory takings.

CONCLUSION

The Court should grant the petition for certiorari.

Respectfully submitted.