Amicus Curiae Brief — Gene Gonzales, et al., Petitioners v. Jay Inslee, Governor of Washington, et al.

No. 23-935

In the Supreme Court of the United States

__________

GENE GONZALES AND SUSAN GONZALES, HORWATH

FAMILY TWO, LLC, AND THE WASHINGTON LANDLORD

ASSOCIATION,

Petitioners,

v.

GOVERNOR JAY INSLEE AND STATE OF WASHINGTON,

Respondents.

__________

On Petition for a Writ of Certiorari to the

Supreme Court of Washington

__________

BRIEF OF THE CATO INSTITUTE AS AMICUS

CURIAE IN SUPPORT OF PETITIONERS

__________

Anastasia P. Boden

Counsel of Record

Thomas A. Berry

Nathaniel Lawson

CATO INSTITUTE

1000 Mass. Ave., N.W.

Washington, DC 20001

(202) 216-1414

aboden@cato.org

April 17, 2024

i

QUESTION PRESENTED

Whether an ordinance that compels the possession

of property by an unwelcome occupant is a categorical

physical taking, as the Eighth Circuit held in Heights

Apartments, LLC v. Walz, 30 F.4th 720 (8th Cir. 2022),

or a permissible regulation of use under Yee v. City of

Escondido?

ii

TABLE OF CONTENTS

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

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

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

SUMMARY OF ARGUMENT ..................................... 2

ARGUMENT ................................................................ 5

I. PROTECTION OF PROPERTY RIGHTS

IS NECESSARY FOR PROSPERITY. ........... 5

II. THE RIGHT TO EXCLUDE IS

FUNDAMENTAL TO PROPERTY

RIGHTS. .......................................................... 9

III.THE VIOLATION OF THE RIGHT TO

EXCLUDE HAS HARMFUL

CONSEQUENCES. ....................................... 13

A. Violating the Right to Exclude Has

Caused Economic Harm. ......................... 13

B. Violating the Right to Exclude Has

Destroyed Livelihoods.............................. 16

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

iii

TABLE OF AUTHORITIES

Page(s)

Cases

Cedar Point Nursery v. Hassid, 141 S. Ct.

2063 (2021) ................................................... 3, 12, 13

Horne v. Dep’t of Agric., 576 U.S. 351 (2015) ........... 12

Kaiser Aetna v. United States, 444 U.S. 164

(1979) ...................................................................... 11

Loretto v. Teleprompter Manhattan CATV

Corp., 458 U.S. 419 (1982) ......................... 10, 11, 12

Pa. Coal Co. v. Mahon, 260 U.S. 393 (1922) ............. 11

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

438 U.S. 104 (1978) ................................................ 11

United States v. General Motors Corp., 323

U.S. 373 (1945) ....................................................... 12

Vanhorne’s Lessee v. Dorrance, 2 U.S. 304

(C.C.D. Pa. 1795) ...................................................... 6

Yee v. City of Escondido, 503 U.S. 519 (1992) ............ 3

Other Authorities

Abby Vesoulis, How Eviction Moratoriums are

Hurting Small Landlords—And Why That’s

Bad for the Future of Affordable Housing,

TIME (June 11, 2020) ................................ 17, 18, 19

ADAM SMITH, LECTURES ON JURISPRUDENCE

(R. L. Meek, D. D. Raphael & P. G. Stein

eds. 1978) .................................................................. 7

ADAM SMITH, THE WEALTH OF NATIONS

(Edwin Cannan ed., Random House, Inc.

1937) (1776) .............................................................. 9

iv

Anna Bahney, Landlords are Running Out of

Money. ‘We Don’t Get Unemployment’, CNN

BUSINESS (Dec. 17, 2020) ........................... 17, 18, 19

ARISTOTLE, POLITICS (Benjamin Jowett trans.,

Clarendon Press 1916) ............................................. 5

Artem Joukov, Overstaying Their Welcome:

Unevictable Tenants, Rents, and Home

Prices (Sept. 25, 2023) (unpublished

manuscript) .............................................................. 8

Brenda Richardson, The Pros And Cons Of

Rent Control For Landlords And Tenants,

FORBES (Mar. 23, 2023) .......................................... 16

Cora Lewis, Many Americans Say Their

Household Expenses are Outpacing

Earnings This Year, AP-NORC Poll Shows,

AP (Oct. 27, 2023) .................................................. 16

DEP’T FOR INT’L DEV., U.K., GROWTH:

BUILDING JOBS AND PROSPERITY IN

DEVELOPING COUNTRIES (2008) ............................... 8

Diana Olick, ‘The Eviction Moratorium is

Killing Small Landlords,’ Says One, as Ban

is Extended Another Month, CNBC (June

25, 2021) ................................................................. 17

Edmund Andrews, Rent Control’s Winners

and Losers, STANFORD BUS. (Feb. 2, 2018) ............ 14

Fast Land, USLEGAL (last visited Feb. 8,

2024) ....................................................................... 11

GERALD P. O’DRISCOLL JR. & LEE HOSKINS,

POLICY ANALYSIS NO. 482, PROPERTY

RIGHTS: THE KEY TO ECONOMIC

DEVELOPMENT (2003) ........................................... 5, 9

v

Germinal G. Van, Property Rights and

Income Inequality (Jan. 2021), MPRA

Paper 105195 ............................................................ 8

Ghost Apartments’ are Ghastly, Needless Bane

on the City, N.Y. POST (Nov. 16, 2022) .................. 15

Howard Husock, Rent Control ‘Shabbifying’

NY’s Housing as Owners Feel the Squeeze,

N.Y. POST (May 5, 2023) ........................................ 15

ILYA SOMIN, THE GRASPING HAND: KELO V.

CITY OF NEW LONDON & THE LIMITS OF

EMINENT DOMAIN (2015) .......................................... 7

JENNIFER NEDELSKY, PRIVATE PROPERTY AND

THE LIMITS OF AMERICAN

CONSTITUTIONALISM (1990) ...................................... 7

John Adams, Discourses on Davila, in 6

WORKS OF JOHN ADAMS 280 (Charles

Francis Adams ed. 1851) ......................................... 5

Juan Javier Del Granado, The Genius of

Roman Law from a Law and Economics

Perspective, 13 SAN DIEGO INT’L L.J. 301

(2011) ...................................................................... 10

Kenneth R. Ahern & Marco Giacoletti,

Robbing Peter to Pay Paul? The

Redistribution of Wealth Caused by Rent

Control (Nat’l Bureau Econ. Rsrch.,

Working Paper No. 30083, 2023) ..................... 15, 16

Kristin Thorne, Long Island Small Landlords

Struggling to Survive Amid Eviction

Moratorium, ABC7NY (Mar. 30, 2021) ........... 17, 18

MAX FARRAND, RECORDS OF THE FEDERAL

CONVENTION OF 1787 (1937) ................................ 6, 7

vi

Memorandum by R. Carter Pittman, The

Virginia Declaration of Rights: Its Place in

History (Oct. 28, 1955) ............................................. 6

Natalie Campisi, What Mom-and-Pop

Landlords Can Do to Relieve Eviction Ban

Pressure, FORBES ADVISOR (Nov. 2, 2022) ............. 17

Rebecca Diamond, What Does Economic

Evidence Tell Us About the Effects of Rent

Control? BROOKINGS INST. (Oct. 18, 2018)....... 13, 14

RICHARD A. EPSTEIN, TAKINGS: PRIVATE

PROPERTY AND THE POWER OF EMINENT

DOMAIN (1985) ........................................................ 10

Richard Roll & John Talbott, Why Many

Developing Countries Just Aren’t (UCLA

Anderson Sch. of Mgmt., Finance Working

Paper No. 19-01, 2001) ............................................. 7

See Jennifer Ludden, Housing is Now

Unaffordable for a Record Half of All U.S.

Renters, Study Finds, NPR (Jan. 25, 2024) .......... 16

THE FEDERALIST NO. 1 (James Madison)

(Clinton Rossiter ed. 1961) ...................................... 6

The Virginia Declaration of Rights, NAT’L

CONST. CTR. (last visited Sept. 14, 2023) ................ 6

Thomas W. Merrill, Property and the Right to

Exclude II, 3 BRIGHAM-KANNER PROP. RTS.

CONF. J. 1 (2014) .................................................... 10

Thomas W. Merrill, Property and the Right to

Exclude, 77 NEB. L. REV. 730 (1998) ....................... 9

Timothy Besley & Maitreesh Ghatak,

Property Rights and Economic

Development, in 5 HANDBOOK FOR

vii

DEVELOPMENT ECONOMICS (Dani Rodrik &

Mark R. Rosenzweig eds., 2010) .............................. 8

Victoria Taft, The Number of Small

Businesses Destroyed by COVID Lockdowns

Will Astound You, PJ MEDIA (June 13,

2021) ......................................................................... 2

Walter E. Williams, Economics and Property

Rights, FOUND. FOR ECON. EDUC. (Jan. 1,

2008) ......................................................................... 8

WILLIAM BLACKSTONE, COMMENTARIES ..................... 10

Constitutional Provisions

VA. CONST. art. I, § 1 .................................................... 6

1

INTEREST OF AMICUS CURIAE1

The Cato Institute is a nonpartisan public policy

research foundation founded in 1977 and dedicated to

advancing the principles of individual liberty, free

markets, and limited government. To that end, Cato’s

Robert A. Levy Center for Constitutional Studies

publishes books and studies, conducts conferences,

produces the annual Cato Supreme Court Review, and

files amicus briefs.

This case interests Cato because it involves the

application of the Takings Clause to government

subsidy programs and implicates the right to

exclude—arguably the most fundamental strand in

property’s “bundle of rights.”

1 Rule 37 statement: All parties were timely notified of the

filing of this brief. No part of this brief was authored by any

party’s counsel, and no person or entity other than amicus funded

its preparation or submission.

2

SUMMARY OF ARGUMENT

Property rights are necessary for economic

prosperity, and the right to exclude is the most

fundamental aspect of property rights. Unfortunately,

the Supreme Court of Washington misinterpreted this

Court’s precedent and held that a law infringing on the

right to exclude does not require just compensation.

Too many other courts have made the same error. See

Pet. at 15–23. If this Court does not step in and correct

this mistaken interpretation, many more laws

undermining the right to exclude will be enacted, to

devastating economic and personal effect.

In March of 2020, the State of Washington imposed

an emergency order responding to the threat of

COVID-19. The order prohibited landlords from

evicting tenants for nonpayment, expired leases, or

any other reason unless the tenant presented “a

significant and immediate risk to the health, safety, or

property of others” or unless the landlord wished to

personally occupy or sell the property. Pet. at 2–4.

The state justified these orders as necessary to

allow tenants to shelter in place. The state viewed

homelessness as a vector for spreading COVID-19 and

believed layoffs due to COVID-19 would hamper the

ability of many people to pay rent.2 See Pet. App. at

4a–6a.

Petitioners own rental properties in Washington

that were covered by the emergency orders. They sued,

2 In fact, layoffs were largely due to government shutdowns

intended to slow the spread of the disease, not due to private

market forces. See, e.g., Victoria Taft, The Number of Small

Businesses Destroyed by COVID Lockdowns Will Astound You, PJ

MEDIA (June 13, 2021), http://tinyurl.com/5n892yhp.

3

claiming that these eviction moratoriums constituted

uncompensated takings under the Fifth and

Fourteenth Amendments. But the Supreme Court of

Washington rejected Petitioners’ takings claims based

on its interpretation of Yee v. City of Escondido, 503

U.S. 519 (1992). See Pet. App at 15a–16a. According to

the Supreme Court of Washington, Yee held that the

government can change the terms and duration of a

tenant’s occupation of a property without creating a

taking, so long as the tenants originally came onto “the

landlords’ property with the landlords’ permission.”

See id. at 15a. The court distinguished Cedar Point

Nursery v. Hassid, 141 S. Ct. 2063 (2021), in which this

Court held that a law granting union organizers access

to private agricultural property was a taking. The

Supreme Court of Washington dismissed the relevance

of Cedar Point because the property owners in that

case had never given any permission for the union

organizers to come onto their property.

The petition clearly lays out the flaws in the

Supreme Court of Washington’s opinion. The Supreme

Court of Washington completely misinterpreted Yee,

which merely stated that an ordinance setting a

maximum rent was not a physical taking. See Pet. at

14. The plaintiffs in Yee were not trying to evict any of

the tenants. See id. The ordinance allowed the

plaintiffs to evict tenants for many reasons, including

nonpayment of rent, violation of the law, expiration of

the lease, or an owner’s wish to change the use of the

property. See Yee, 503 U.S. at 524. When the Court in

Yee stated that the rent control ordinance was not a

taking because the landlords voluntarily rented their

property to the tenants, see id. at 527–28, it was in a

context where only price controls were at issue. The

Court was not saying that an owner’s voluntary grant

4

of a limited, conditional tenancy allows the

government to extend the duration and terms of that

tenancy without limit and without just compensation.

Such a holding would contradict this Court’s long line

of physical takings jurisprudence, from Kaiser Aetna

and Loretto to Cedar Point. See Pet. at 24–29.

Amicus submits this brief to emphasize that the

Supreme Court of Washington’s misinterpretation of

Yee has serious practical consequences. Local

governments enacted numerous eviction moratoriums

during the pandemic. These moratoriums allowed

tenants to continue occupying rental properties

regardless of missed payments, bad behavior, or the

owner’s desire to change the use of the property. And

general rent control laws similarly restricting

evictions have proliferated in recent years. Such laws

and ordinances have reduced property values and

caused many small-time landlords to struggle to meet

their bills. The rental housing industry is worth $3.4

trillion and employs 17.5 million jobs, see infra Part

III.A, so these added costs weigh down an already

struggling economy. This financial impact on

landlords has caused a reduction in available rental

housing, perversely increasing rents for tenants and

leading to the gentrification of cities. It has also caused

landlords to neglect necessary maintenance, harming

the quality of housing that tenants receive. Given that

more than a third of housing units are occupied by

renters, a huge proportion of the population suffers

when rents increase and the quality of rental housing

decreases.

For all these reasons, it is vital that property

owners have the ability to vindicate their rights to

bring takings challenges to eviction moratoriums. This

5

Court should grant certiorari and clarify that Yee does

not shield the orders at issue from takings challenges.

ARGUMENT

I.

PROTECTION OF PROPERTY RIGHTS IS

NECESSARY FOR PROSPERITY.

Strong protection of property rights is critical for

economic prosperity. One cannot live, let alone live

well, without obtaining goods. And people generally

will not spend time, effort, and resources producing

goods unless they benefit from that expenditure. As

Aristotle said: “[T]hat which is common to the greatest

number has the least care bestowed upon it. Every one

thinks chiefly of his own, hardly at all of the common

interest; and only when he is himself concerned as an

individual.” ARISTOTLE, POLITICS 57 (Benjamin Jowett

trans., Clarendon Press 1916).3 The primary critics of

property rights, such as Karl Marx, denied this

fundamental aspect of human nature. See GERALD P.

O’DRISCOLL JR. & LEE HOSKINS, POLICY ANALYSIS

NO. 482, PROPERTY RIGHTS: THE KEY TO ECONOMIC

DEVELOPMENT 4–5 (2003). Property rights ensure that

people get the benefit of their expended time, effort,

and resources.

Our Founding Fathers understood the importance

of protecting property rights. John Adams proclaimed

that “[p]roperty must be secured or liberty cannot

exist.” John Adams, Discourses on Davila, in 6 WORKS

OF JOHN ADAMS 280 (Charles Francis Adams ed.,

1851). Alexander Hamilton declared that “one great

obj[ect] of Gov[ernment] is the personal protection and

security of property.” I MAX FARRAND, RECORDS OF THE

3 Available at https://tinyurl.com/47stsnju.

6

FEDERAL CONVENTION OF 1787, at 534 (1937). And

James Madison famously wrote that “the first object of

government” is the “protection of different and

unequal faculties of acquiring property.” THE

FEDERALIST NO. 10, at 78 (James Madison) (Clinton

Rossiter ed., 1961).

This understanding was evident in the law of the

founding era. In 1776 George Mason wrote the

Virginia Declaration of Rights, which helped inspire

the Declaration of Independence, other state

constitutions, and the federal Bill of Rights. See The

Virginia Declaration of Rights, NAT’L CONST. CTR. (last

visited Sept. 14, 2023).4 In its first article, the

declaration stated that “all men . . . have certain

inherent rights, of which . . . they cannot, by any

compact, deprive or divest their posterity; among

which [is] . . . the means of acquiring and possessing

property.” Memorandum by R. Carter Pittman, The

Virginia Declaration of Rights: Its Place in History

(Oct. 28, 1955).5 In 1795, Supreme Court Justice

William Patterson, riding circuit, wrote that “the right

of acquiring and possessing property, and having it

protected, is one of the natural, inherent, and

unalienable rights of man.” Vanhorne’s Lessee v.

Dorrance, 2 U.S. 304 (C.C.D. Pa. 1795). Even Adam

Smith stated in a 1760s lecture in Glasgow that “[t]he

first and chief design of every system of government is

to . . . prevent the members of society from incroaching

on one another’s property, or seizing what is not their

own . . . to give each one the secure and peacable

4 Available at https://tinyurl.com/37py34t9.

5 Available at https://tinyurl.com/y6mjs727. This statement

remains in the Virginia Constitution today, except that “among

which are” is replaced by “namely.” See VA. CONST. art. I, § 1.

7

possession of his own property.” ADAM SMITH,

LECTURES ON JURISPRUDENCE 5 (R. L. Meek, D. D.

Raphael & P. G. Stein eds., 1978).

The Founders were particularly interested in

protecting property rights from “oppressive majorities,

special interests, and government officials.” ILYA

SOMIN, THE GRASPING HAND: KELO V. CITY OF NEW

LONDON & THE LIMITS OF EMINENT DOMAIN 42 (2015).

James Madison, author of the Fifth Amendment

Takings Clause, feared that property rights would be

undermined by the majority under republican

government. See JENNIFER NEDELSKY, PRIVATE

PROPERTY

AND

THE

LIMITS

OF

AMERICAN

CONSTITUTIONALISM 16–66 (1990). Gouverneur Morris

agreed, stating that “[e]very man of observation had

seen in the democratic branches of the State

Legislatures, . . . [and] in Congress . . . excesses

ag[ainst] . . . private property.” FARRAND, supra, at

512. Morris feared not just that a majority would seize

the property of the wealthy minority, but that the

wealthy would use their influence to threaten the

property rights of the poor. See SOMIN, supra, at 42.

These fears led to the ratification of the Fifth

Amendment Takings Clause.

The Founders were correct to prioritize the

protection of property rights. A 2001 study measured

the correlation of 14 potential explanatory variables

with Gross National Income per capita to determine

which variables best explain economic prosperity, and

the variable with the highest level of significance was

property rights. See Richard Roll & John Talbott, Why

Many Developing Countries Just Aren’t 4 (UCLA

Anderson Sch. of Mgmt., Finance Working Paper No.

19-01, 2001). Two other studies also found a significant

8

relationship between stronger property rights

protections and higher income per capita. See

Germinal G. Van, Property Rights and Income

Inequality 8–12 (Jan. 2021), MPRA Paper 105195;6

Timothy Besley & Maitreesh Ghatak, Property Rights

and Economic Development, in 5 HANDBOOK FOR

DEVELOPMENT ECONOMICS 4554–56 (Dani Rodrik &

Mark R. Rosenzweig eds., 2010). Numerous studies

have found that countries with laws more strongly

protecting shareholder and creditor assets have bigger

and broader capital markets and more economic

growth overall. See Artem Joukov, Overstaying Their

Welcome: Unevictable Tenants, Rents, and Home

Prices 6 (Sept. 25, 2023) (unpublished manuscript).7

The 2007 edition of The Economic Freedom of the

World found that the countries in the top quartile of

economic freedom had an average GDP per capita of

$26,013, versus an average GDP per capita of $3,305

for the bottom quartile. See Walter E. Williams,

Economics and Property Rights, FOUND. FOR ECON.

EDUC. (Jan. 1, 2008). Similarly, the top quartile had

an economic growth rate of 2.25% compared to 0.35%

for the bottom quartile. See id. Given that a 10%

increase in a country’s average income corresponds to

a 20–30% decrease in the poverty rate, see DEP’T FOR

INT’L DEV., U.K., GROWTH: BUILDING JOBS AND

PROSPERITY IN DEVELOPING COUNTRIES 3 (2008), this

provides a real and profound benefit to individual wellbeing.

The benefits of economic freedom are seen even

when comparing places with similar language, culture,

6 Available at https://tinyurl.com/3xptu33n.

7 Available at http://tinyurl.com/mbw3d5e4.

9

and traditions. South Koreans have, on average, at

least 17 times the income of North Koreans. See

O’DRISCOLL & HOSKINS, supra, at 2. Finland and

Estonia are practically neighbors, their languages

share a common root, and they have similar cultures

and values. Yet while their standard of living was

approximately the same in the 1930s, in 2000, after

Estonia suffered fifty years of Communist rule, the

average Finn earned from 2.5 times to over seven

times what the average Estonian earned. See id. East

Germany was also significantly poorer than West

Germany after suffering Communist rule. See id.

Communist China’s real per capita GDP in 2000 was

less than $4,000. See id. Taiwan, which split from

China during the Communist revolution, had a real

per capita GDP of more than $17,000. See id. Hong

Kong, which had ended a century of British rule just a

year before, had a real per capita GDP of $25,153. See

id. In every case, the nation that better respected

property rights had greater prosperity.

Overall, as Adam Smith said, “commerce and

manufactures can seldom flourish long in any state . . .

in which people do not feel themselves secure in the

possession of their property.” ADAM SMITH, THE

WEALTH OF NATIONS 862 (Edwin Cannan ed., Random

House, Inc. 1937) (1776).

II. THE

RIGHT

TO

EXCLUDE

IS

FUNDAMENTAL TO PROPERTY RIGHTS.

The right to exclude is the sine qua non of property.

Thomas W. Merrill, Property and the Right to Exclude,

77 NEB. L. REV. 730, 730–31 (1998). The rights to use,

transfer, include, and dispose of property “are

dependent upon and derive from the right to exclude,

which is indispensable.” Thomas W. Merrill, Property

10

and the Right to Exclude II, 3 BRIGHAM-KANNER PROP.

RTS. CONF. J. 1, 25 (2014) [hereinafter Merrill, Right

to Exclude II]. Blackstone described the “right of

property” as “that sole and despotic dominion which

one man claims and exercises over the external things

of the world, in total exclusion of the right of any other

individual in the universe.” 2 WILLIAM BLACKSTONE,

COMMENTARIES *2. Blackstone’s definition traces its

lineage to Roman conceptions of the right. See Juan

Javier Del Granado, The Genius of Roman Law from a

Law and Economics Perspective, 13 SAN DIEGO INT’L

L.J. 301, 316 (2011) (“Roman property law typically

gives a single property holder a bundle of rights with

respect to everything in his domain, to the exclusion of

the rest of the world.”).

Put another way, the ancient and fundamental

understanding of “the right to property” holds “[t]he

notion of exclusive possession” to be “implicit in the

basic conception of private property.” RICHARD A.

EPSTEIN, TAKINGS: PRIVATE PROPERTY AND THE POWER

OF EMINENT DOMAIN 63 (1985). “Exclusion lies at the

root of property because the institution of property is

dependent on possession, and exclusion lies at the root

of possession.” Merrill, Right to Exclude II, supra, at

14. Thus, a physical taking “is perhaps the most

serious form of invasion of an owner’s property

interests. To borrow a metaphor, 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 v. Teleprompter

Manhattan CATV Corp., 458 U.S. 419, 435 (1982).

This Court has repeatedly and correctly

acknowledged the centrality of the right to exclude as

the fundamental element of property. Over a century

11

ago, this Court determined that regulations of

property, in addition to confiscations, constitute

takings if they “go[] too far.” Pa. Coal Co. v. Mahon,

260 U.S. 393, 415 (1922). Approximately half a century

later, the Court held that whether a regulation went

too far would be determined by an “essentially ad hoc,

factual inquir[y]” that balances multiple factors. Penn

Central Transp. Co. v. New York City, 438 U.S. 104,

124 (1978).

The year after Penn Central, this Court in Kaiser

Aetna v. United States held that the physical invasion

of property is a “government intrusion of an unusually

serious character.” Loretto, 458 U.S. at 433. The case

involved an owner making improvements to his

private property that turned the property from fast

lands8 into a “navigable water of the United States.”

See 444 U.S. 164, 170 (1979). Under federal law,

property owners of navigable waters of the United

States are subject to a navigational servitude

prohibiting them from excluding the public from those

waters. See id. at 165–66. Furthermore, there were

prior cases holding that federal navigational

servitudes often did not constitute a taking requiring

compensation. See id. at 175–77. However, the Court

refused to extend those precedents to the case at hand,

instead holding that the federal navigational servitude

was similar enough to the seizure of an easement in

the property to constitute a taking. See id. at 177–80.

This Court further protected the right to exclude in

Loretto, holding that a permanent physical occupation

8 “Fast Land” is land above the high water mark, the owner

of which must receive just compensation when government projects flood the land. See Fast Land, USLEGAL (last visited Feb. 8,

2024), http://tinyurl.com/2s3tavjz.

12

constitutes a per se taking. See 458 U.S. at 441. The

Court rejected the application of an ad hoc inquiry

under Penn Central, finding that all permanent

physical occupations of property are takings, even

“minor” ones. See id. at 421, 427. According to the

Court, “[p]roperty rights in a physical thing have been

described as the rights ‘to possess, use and dispose of

it.’” Id. at 435 (quoting United States v. General Motors

Corp., 323 U.S. 373, 378 (1945)). Permanent physical

occupations are “the most serious form of invasion of

an owner’s property interests” because they “destroy[]

each of these rights.” Id. This Court later confirmed

that Loretto’s per se rule also applies to chattel

property. Horne v. Dep’t of Agric., 576 U.S. 351, 357–

58 (2015).

Most recently, in Cedar Point, the Court

emphasized the importance of the right to exclude

when it determined that a state law requiring

agricultural employers to allow union organizers onto

their property for up to three hours per day for 120

days per year effected a per se physical taking. See 141

S. Ct. at 2072.

Chief Justice Roberts, writing for the Court,

clarified that “Government action that physically

appropriates property is no less a physical taking

because it arises from a regulation.” Id. As a result, the

“essential question” to determine whether a per se

physical taking has occurred is “whether the

government has physically taken property for itself or

someone else—by whatever means—or has instead

restricted a property owner’s ability to use his own

property.” Id. The Chief Justice further explained that

“[w]henever a regulation results in a physical

13

appropriation of property a per se taking has occurred,

and Penn Central has no place.” Id.

Additionally,

the

duration

and

size

of

appropriations are not relevant to the determination

of whether per se physical takings have occurred; they

“bear[] only on the amount of compensation” due. Id.

at 2074. The fundamental problem with the California

access law was that “[r]ather than restraining the

growers’ use of their own property, the regulation

appropriate[d] for the enjoyment of third parties the

owners’ right to exclude.” Id. at 2072.

If property rights are crucial for prosperity, the

right to exclude is crucial for property rights.

III. THE VIOLATION OF THE

EXCLUDE

HAS

CONSEQUENCES.

RIGHT TO

HARMFUL

When the government weakens property rights

with laws infringing on the right to exclude, the result

is economic harm and ruined livelihoods.

A. Violating the Right to Exclude Has

Caused Economic Harm.

The COVID-19 eviction moratoriums were not the

first laws to infringe on the right to exclude, although

they were among the most severe. Some areas have

previously had rent control laws with restrictions on

evictions. See Rebecca Diamond, What Does Economic

Evidence Tell Us About the Effects of Rent Control?

BROOKINGS INST. (Oct. 18, 2018).9 Analysis of the

effects of those laws has shown that they cause more

harms than benefits.

9 Available at http://tinyurl.com/3w797b25.

14

In 1994, San Francisco passed a major rent control

expansion. See id. Those who were tenants at the time

of its enactment saved between $2,300 and $6,600 a

year and were 19% less likely to subsequently move.

See Diamond, supra; Edmund Andrews, Rent Control’s

Winners and Losers, STANFORD BUS. (Feb. 2, 2018).10

However, later tenants paid approximately 5% more in

rent, largely because the number of rent-controlled

housing units declined by 25% and the number of

housing units overall declined by 5%. See Andrews,

supra. Owners of rent-controlled buildings were 8%

more likely to convert the buildings to condos, which

were not covered under the law. See Diamond, supra.

As a result, residents of the rent-controlled

neighborhoods had at least 18% more income than

residents of non-rent-controlled neighborhoods,

meaning that rent control actually increased

gentrification rather than helping poor communities.

See id.

The same year, Cambridge, Massachusetts, voted

to abolish its rent control law. See id. As a result, the

formerly rent-controlled properties increased in value

by 45%, roughly making up for the 40+% the rents on

those properties had been below the market rate when

the law was in force. See id. Furthermore, non-rentcontrolled properties neighboring the rent-controlled

properties also increased in value after the law was

abolished. See id. This means that the rent control law

had not only been decreasing the value of the

landlords’ properties but those of everyone in the area.

Rent control hurt not only landlords but property

owners in general.

10 Available at http://tinyurl.com/at7s47pd.

15

New York City also has rent control, and in 2019

the city banned rent increases made to fund property

improvements. The explicit goal was to prevent the

type of “gentrification” that San Francisco and other

cities have seen. See Howard Husock, Rent Control

‘Shabbifying’ NY’s Housing as Owners Feel the

Squeeze, N.Y. POST (May 5, 2023).11 As a result, nearly

50,000 apartment units now sit vacant because they

lack the expensive renovations necessary to comply

with building codes. See ‘Ghost Apartments’ are

Ghastly, Needless Bane on the City, N.Y. POST (Nov.

16, 2022).12 Furthermore, the quality of non-vacant

apartments decreased—a third of rent-controlled

apartments have rodents, nearly double the rate of

unregulated apartments. See Husock, supra. Rentcontrolled apartments also have twice as many leaks

and toilet and elevator breakdowns, and three times

as many heating breakdowns and mold infestations.

See id. And the law did not even truly prevent

gentrification, as 22% of rent-stabilized tenants have

incomes of $100,000 or more. See id.

St. Paul, Minnesota, passed rent control in 2021.

See Kenneth R. Ahern & Marco Giacoletti, Robbing

Peter to Pay Paul? The Redistribution of Wealth

Caused by Rent Control 1 (Nat’l Bureau Econ. Rsrch.,

Working Paper No. 30083, 2023). The measure ended

up reducing property values overall by 6–8%, and

rental property values by an additional 6% compared

to owner-occupied properties. See id. at 2. This cost the

city $1.47 billion in property value and caused a 4%

shortfall in expected property tax revenue, which is

11 Available at http://tinyurl.com/2r64mbkr.

12 Available at http://tinyurl.com/5dysy55t.

16

the main source of revenue for the city and school

district. See id. at 3. The cost to landlords was

substantially larger than the benefit to tenants. See id.

at 5. Additionally, the main beneficiaries of the rent

control measure were wealthy tenants, not poor

tenants. See id. at 4. Given that landlords respond to

rent control by abusing loopholes, neglecting

maintenance, or removing properties from the market,

low-income tenants only suffer further. See id. at 1.

Laws infringing on landlords’ right to exclude have

a huge impact on the national economy. The rental

housing industry is worth $3.4 trillion and employs

17.5 million jobs. See Brenda Richardson, The Pros

And Cons Of Rent Control For Landlords And Tenants,

FORBES (Mar. 23, 2023).13 More than a third of housing

units are occupied by renters. See Ahern & Giacoletti,

supra, at 1. Given the severe housing shortage that is

currently driving up rental prices14 and an economy

that three-quarters of Americans say is poor,15 no one

benefits from policies that make it uneconomical to

provide rental housing.

B. Violating the Right to Exclude Has

Destroyed Livelihoods.

The increased costs to landlords from such policies

don’t just hurt big corporations. The majority of

landlords are individual investors. See Diana Olick,

13 Available at http://tinyurl.com/3j5765uf.

14 See Jennifer Ludden, Housing is Now Unaffordable for a

Record Half of All U.S. Renters, Study Finds, NPR (Jan. 25,

2024), http://tinyurl.com/4mjs7er6.

See Cora Lewis, Many Americans Say Their Household

Expenses are Outpacing Earnings This Year, AP-NORC Poll

Shows, AP (Oct. 27, 2023), http://tinyurl.com/3t6m4ned.

15

17

‘The Eviction Moratorium is Killing Small Landlords,’

Says One, as Ban is Extended Another Month, CNBC

(June 25, 2021).16 Such “mom-and-pop landlords” own

a majority of single-family housing, which constitutes

half of rental housing and 77% of small building units.

See Anna Bahney, Landlords are Running Out of

Money. ‘We Don’t Get Unemployment’, CNN BUSINESS

(Dec. 17, 2020);17 Natalie Campisi, What Mom-andPop Landlords Can Do to Relieve Eviction Ban

Pressure, FORBES ADVISOR (Nov. 2, 2022).18 A little

under half of all rental housing in total is owned by

such landlords. See Abby Vesoulis, How Eviction

Moratoriums are Hurting Small Landlords—And Why

That’s Bad for the Future of Affordable Housing, TIME

(June 11, 2020).19 A third of these landlords are retired

and rely on rents for their income. See Campisi, supra.

In June 2019, Louis DiPasquale rented out the

home he bought for his son because his son was on

deployment with the army. See Kristin Thorne, Long

Island Small Landlords Struggling to Survive Amid

Eviction Moratorium, ABC7NY (Mar. 30, 2021).20 His

tenant did not pay the full amount in February 2020,

so he moved to evict her. But then the pandemic hit,

the courts closed, and the state issued an eviction

moratorium. See id. Under the ban, tenants did not

have to pay rent so long as they attested that they were

experiencing financial hardship due to the pandemic,

even without any evidence of such hardship. See id.

16 Available at http://tinyurl.com/yxk8hxua.

17 Available at http://tinyurl.com/yyd756bh.

18 Available at http://tinyurl.com/4m8wnkva.

19 Available at http://tinyurl.com/4dypykn8.

20 Available at http://tinyurl.com/4rd5zzht.

18

Louis found videos of his tenant vacationing in other

states. See id. Because of the ban, Louis lost $32,000

and his son, back from deployment, was unable to

move into the home purchased for him. See id.

In the 1960s, Greta Arceneaux was a mother of two

going through a divorce with a low-paying secretarial

job. See Vesoulis, supra. Hoping to support her family,

she took out a loan and tore down her home to build a

five-unit apartment complex. See id. The resulting

rental money helped her to put her kids through

college, buy a new home, and save for her retirement.

See id. In 2020 she was 81, but her retirement funds

went “down the tubes” due to a COVID-19 eviction

moratorium. Id. Because of the moratorium, Greta had

$15,000 in unpaid rent and zero government

assistance to help pay her maintenance expenses and

other bills, including her mortgage. See id. And new

building codes required her to pay at least $60,000 by

the end of the year for earthquake prevention

reinforcement. See id. While Greta felt sorry for the

troubles her tenants faced due to the pandemic, she

did nothing wrong herself and yet was forced to take

on the tenants’ burden without government aid. See id.

The $2 trillion CARES Act, which was passed in part

to help landlords, merely removed caps on their ability

to write off net operating losses, which benefited big

businesses but not mom-and-pop landlords like Greta.

See id.

An estimated 9.2 million renters were behind on

rent by the end of 2020, by an average of $5,400 for

those who lost their jobs. See Bahney, supra. Many

landlords are having trouble paying their bills, both

for maintenance issues such as trash removal, heating

maintenance, and plumbing breakdowns, and for basic

19

things like real estate taxes and mortgages. See id.

Many of these landlords only purchased their rental

properties in the last five years and are fully

leveraged, and so do not have the cash or equity to get

loans. See id. These landlords who cannot cover their

costs with rental fees are likely to sell their properties.

That is bad news for low-income tenants, because the

purchasers are most often either families who will

convert the apartments to personal housing or large

investment groups who are more likely to renovate

and increase the rent. See Vesoulis, supra.

Neither landlords nor tenants benefit from laws

taking away landlords’ right to exclude.

CONCLUSION

For the foregoing reasons, and those described by

the Petitioners, this Court should grant the petition.

........................................... Respectfully submitted,

Anastasia P. Boden

Counsel of Record

Thomas A. Berry

Nathaniel Lawson

CATO INSTITUTE

1000 Mass. Ave., N.W.

Washington, DC 20001

(202) 216-1414

aboden@cato.org

April 17, 2024