Amicus Curiae Brief — The Gym 24/7 Fitness, LLC, Petitioner v. Michigan

Nos. 24-757, 24-754

IN THE

Supreme Court of the United States

THE GYM 24/7 FITNESS, LLC,

Petitioner,

v.

STATE OF MICHIGAN,

_______

Respondent.

MOUNT CLEMENS RECREATIONAL BOWL, INC.,

ET AL.,

Petitioners,

v.

ELIZABETH HERTEL, ETC., ET AL.,

Respondents.

________

On Petitions for Writs of Certiorari

to the Michigan

Court of Appeals

_______

Amici Curiae Brief of National Federation

of Independent Business (NFIB)

Small Business Legal Center, Inc. and Owners

Counsel of America Supporting Petitioners

MICHAEL M. BERGER

MANATT, PHELPS & PHILLIPS, LLP

2049 Century Park East, Suite 1700

Los Angeles, CA 90067

(310) 312-4185

mmberger@manatt.com

Counsel for Amici Curiae

NFIB Small Business Legal Center

and Owners Counsel of America

i

TABLE OF CONTENTS

INTERESTS OF AMICI CURIAE .......................... 1

INTRODUCTION ................................................... 3

SUMMARY OF ARGUMENT ................................ 4

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

I

There is Conflict and Confusion

on How to Apply Penn Central—the

Case This Court Calls its “Polestar”

in this Field. ................................................. 6

II

The Playing Field Needs to be

Levelled Because Application of the

Penn Central Test Rarely Results in a

Finding of a Taking. ..................................... 9

III

The Key to Property Ownership is

the Right to Make Productive Use. ........... 12

IV

Even Legitimate Government Actions

Can Require Compensation When

They Impress Private Property into

Public Service. ............................................ 18

CONCLUSION ...................................................... 25

ii

TABLE OF AUTHORITIES

CASES

Agins v. City of Tiburon,

447 U.S. 255, 260 (1980) ................................... 12

Bowles v. United States,

31 Fed. Cl. 37 (1994) ......................................... 13

Blanchette v. Conn. Gen. Ins. Corps.,

419 U.S. 102 (1974)........................................... 22

Bridge Aina Le‘a, LLC v. Hawaii Land Use

Commission,

950 F.3d 610 (9th Cir 2020) ............................... 8

Bridge Aina Le‘a, LLC v. Hawaii Land Use

Commission,

141 S.Ct. 731 (2021) .................. 3, 5, 8, 12, 14, 15

Cedar Point Nursery v. Hassid,

594 U.S. 139 (2021)............................................. 2

Chauffeurs, Teamsters, etc. v. Terry,

494 U.S. 558 (1990)............................................. 9

City of Monterey v. Del Monte Dunes at

Monterey, Ltd.,

526 U.S. 687 (1999)....................................... 9, 24

Creppel v. United States,

41 F.3d. 627 (Fed. Cir. 1994) ............................ 23

Dames & Moore v. Regan,

453 U.S. 654 (1981)........................................... 23

Dimick v. Schiedt,

293 U.S. 474 (1935)............................................. 9

iii

TABLE OF AUTHORITIES

(continued)

District Intown Properties Ltd. Partnership v.

District of Columbia,

198 F.3d 874 (D.C. Cir. 1999) ........................... 11

Dolan v. City of Tigard,

512 U.S. 374 (1994)........................................... 12

First English Evangelical Lutheran Church

of Glendale v. Los Angeles County,

482 U.S. 304 (1987)......................................19, 22

Florida Rock Indus., Inc. v. U.S.,

791 F.2d 893 (Fed. Cir. 1986) ........................... 24

Florida Rock Indus., Inc. v. United States,

18 F.3d 1560 (Fed. Cir. 1994) ......................19, 23

Florida Rock Indus., Inc. v. United States,

45 Fed. Cl. 21 (1999) ........................................... 8

Hughes v. State of Washington,

389 U.S. 290 (1967)........................................... 24

Hurley v. Kincaid,

285 U.S. 95 (1932)........................................22, 23

Kaiser Aetna v. United States,

444 U.S. 164 (1979)...................................... 21-22

Kempf v. City of Iowa City,

402 N.W.2d 393 (Iowa 1987) ............................ 13

Keystone Bituminous Coal Assn. v.

DeBenedictis,

480 U.S. 470 (1987)......................................12, 15

iv

TABLE OF AUTHORITIES

(continued)

Kirby Forest Indus., Inc. v. United States,

467 U.S. 1 (1984)............................................... 13

Knick v. Township of Scott,

588 U.S. 180 (2019)............................................. 4

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

544 U.S. 528 (2005)....................................4, 6, 20

Loretto v. Teleprompter Manhattan CATV Corp.,

458 U.S. 419 (1982)........................................... 20

Lucas v. South Carolina Coastal Council,

505 U.S. 1003 (1992)................ 5, 7, 12, 14, 15, 17

Nekrilov v. City of Jersey City,

45 F.4th 662 (3d Cir. 2022) .............................. 11

Nemmers v. City of Dubuque,

764 F.2d 502 (8th Cir. 1985) ............................ 13

Nollan v. Cal. Coastal Commn.,

483 U.S. 825 (1987)..................................3, 22, 25

Pakdel v. San Francisco,

594 U.S. 474 (2021)......................................... 1, 2

Palazzolo v. Rhode Island,

533 U.S. 606 (2001)......................................... 6, 7

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

438 U.S. 104 (1978)............................ 4-12, 14, 18

Pennsylvania Coal Co. v. Mahon,

260 U.S. 393 (1922).............................. 6, 7, 19-22

v

TABLE OF AUTHORITIES

(continued)

Preseault v. I.C.C.,

494 U.S. 1 (1990)............................................... 23

Ranch 57 v. City of Yuma,

731 P.2d 113 (Ariz. 1986) ................................. 13

Ruckelshaus v. Monsanto Co.,

467 U.S. 986 (1984)........................................... 23

Sackett v. EPA,

598 U.S. 651 (2023)......................................... 1, 2

Sheetz v. County of El Dorado,

601 U.S. 267 (2024)......................................... 1, 2

Shelton v. Tucker,

364 U.S. 479 (1960)........................................... 25

Skaw v. United States,

740 F.2d 932 (Fed. Cir. 1984) ........................... 24

Stanley v. Illinois,

405 U.S. 645 (1972)........................................... 25

Tahoe-Sierra Preservation Council v. Tahoe

Reg. Plan. Agency,

535 U.S. 302 (2002)..................................7, 15, 16

Terminiello v. City of Chicago,

337 U.S. 1 (1949)............................................... 12

Tyler v. Hennepin County,

598 U.S. 631 (2023)......................................... 1, 2

United States v. Clarke,

445 U.S. 253 (1980)........................................... 24

vi

TABLE OF AUTHORITIES

(continued)

United States v. Peewee Coal Co.,

341 U.S. 114 (1951)........................................... 19

Wheeler v. City of Pleasant Grove,

833 F.2d 267 (11th Cir. 1987)........................... 13

Whitney Benefits, Inc. v. United States,

926 F.2d 1169 (Fed. Cir. 1991) ....................23, 24

Wilkins v. United States,

598 U.S. 152 (2023)......................................... 1, 2

Williamson County Reg. Plan. Agency v.

Hamilton Bank,

473 U.S. 172 (1985)....................................4, 5, 14

Youngstown Sheet & Tube Co. v. Sawyer,

343 U.S. 579 (1952)........................................... 19

CONSTITUTION

Fifth Amendment ................................3, 4, 18, 20, 22

Bill of Rights........................................................... 24

STATUTES

42 U.S.C. §1983 ........................................................ 9

vii

TABLE OF AUTHORITIES

(continued)

OTHER AUTHORITIES

Berger, Michael M., Whither Regulatory Takings?

51 The Urban Lawyer 171 (2021) ...................... 8

Cordes, Mark W., Takings Jurisprudence as

Three-Tiered Review, 20 J. Nat. Resources

& Envtl. L. 1 (2006) .......................................... 11

Eagle, Steven J., The Four-Factor Penn Central

Regulatory Takings Test,

118 Penn. St. L. Rev. 601 (2014) ...................... 10

Echeverria, John, Is the Penn Central Three

Factor Test Ready for History’s Dustbin?

52 Land Use L. & Zon. Dig. 3 (2000)................ 10

Fernandez, Kaitee Anderson, How Many

Gyms Survived the Devastation that was

2020?

Health & Fitness Assn (Aug. 5, 2021) ............. 17

Mandelker, Daniel R., Litigating Land Use

Cases in Federal Court: A Substantive

Due Process Primer,

55 Real Prop., Trust & Estate L.J. 69

(2020)................................................................. 11

Manns, Jeffrey, Economic Liberty Takings,

29 Geo. Mason L. Rev. 73 (2021) ...................... 16

Oakes, James L., “Property Rights” in

Constitutional Analysis Today,

56 Wash. L. Rev. 583 (1981) ............................. 11

viii

TABLE OF AUTHORITIES

(continued)

Pomeroy, Adam R., Penn Central After 35

Years: A Three Part Balancing Test or A

One Strike Rule?

22 Fed. Cir. B.J. 677 (2013) .............................. 11

Sax, Joseph L., The Property Rights

Sweepstakes: Has Anyone Held the

Winning Ticket?,

34 Vt. L. Rev. 157 (2009) .................................. 10

Singer, Joseph William, Justifying

Regulatory Takings,

41 Ohio N.U.L. Rev. 601 (2015) ....................... 10

Sterk, Stewart E. The Federalist Dimension

of Regulatory Takings Jurisprudence,

114 Yale L.J. 203 (2004) ................................... 10

Scalia, Antonin, The Rule of Law as a Law of

Rules, 56 U. Chi. L. Rev. 1175 (1989) ................ 9

Williams & Taylor, American Land Planning

Law (2003 rev. ed.) ........................................... 10

1

INTERESTS OF AMICI CURIAE

The National Federation of Independent

Business Small Business Legal Center, Inc.

(NFIB Legal Center) is a nonprofit, public interest

law firm established to provide legal resources and

be the voice for small businesses in the nation's

courts through representation on issues of public

interest affecting small businesses. It is an affiliate

of the National Federation of Independent Business,

Inc. (NFIB), which is the nation's leading small

business association, representing members’

interests in Washington, D.C. and all 50 states.

NFIB's mission is to promote and protect the rights

of its members to own, operate and grow their

businesses.1

To fulfill its role as the voice for small business,

the NFIB Legal Center frequently files amicus briefs

in cases that will impact small businesses. On

property rights specifically, the NFIB Legal Center

has been involved in many of this Court’s recent

cases, including Sheetz v. County of El Dorado, 601

U.S. 267 (2024); Tyler v. Hennepin County, 598 U.S.

631 (2023); Sackett v. EPA, 598 U.S. 651 (2023);

Wilkins v. United States, 598 U.S. 152 (2023); Pakdel

v. San Francisco, 594 U.S. 474 (2021); and Cedar

Point Nursery v. Hassid, 594 U.S. 139 (2021).

1 Pursuant to Rule 37.6, the NFIB Legal Center and Owners

Counsel of America state that no counsel for any party has

authored this brief in whole or in part and no person other than

the amici has made any monetary contribution to this brief’s

preparation or submission. The parties were timely notified.

2

Owners’ Counsel of America (OCA) is an

invitation-only national network of the most

experienced eminent domain and property rights

attorneys. They have joined together to advance,

preserve and defend the rights of private property

owners, and thereby further the cause of liberty,

because the right to own and use property is “the

guardian of every other right,” and the basis of a free

society. See James W. Ely, The Guardian of Every

Other Right: A Constitutional History of Property

Rights (2d ed. 1998). As the lawyers on the front lines

of property law and property rights, OCA brings

unique perspective to this case. OCA is a non-profit

501(c)(6) organization sustained solely by its

members. Only one member lawyer is admitted from

each state. OCA seeks to use its members’ combined

knowledge and experience as a resource in the

defense of private property ownership, and OCA

member attorneys have been involved in landmark

property law cases in nearly every jurisdiction

nationwide. Additionally, OCA members and their

firms have been counsel for a party or amicus in

many of the property cases this Court has considered

in the past forty years, including most recently

Sheetz v. County of El Dorado, 601 U.S. 267 (2024);

Tyler v. Hennepin County, 598 U.S. 631 (2023);

Sackett v. EPA, 598 U.S. 651 (2023); Wilkins v.

United States, 598 U.S. 152 (2023); Pakdel v. San

Francisco 594 U.S. 474 (2021); and Cedar Point

Nursery v. Hassid, 594 U.S. 139 (2021). OCA

members have also authored and edited treatises,

books, and law review articles on property law and

property rights.

3

INTRODUCTION

The law regarding regulatory takings of property

under the 5th Amendment is in disarray for one

reason: the standards for determining when a taking

has occurred remain obscure notwithstanding more

than 40 years of litigation and multiple Court

opinions.

Certiorari is needed to make intelligible the

standard by which to determine whether

government regulations have taken private property

for public use under the 5th Amendment.

More than three decades ago, Justice Stevens

complained:

“Even the wisest lawyers would have to

acknowledge great uncertainty about the

scope of this Court’s takings jurisprudence.”

Nollan v. Cal. Coastal Commn., 483 U.S.

825, 866 (1987) (dissenting opinion).

After 30 more years of litigation and numerous

opinions from this Court, the situation has not

improved, leading Justice Thomas to lament:

“If there is no such thing as a regulatory

taking, we should say so. And if there is, we

should make clear when one occurs.” Bridge

Aina Le‘a v. Hawaii Land Use Commission,

141 S.Ct. 731, 732 (2021) (Thomas, J,

dissenting from denial of certiorari).

Rather than establishing clear bright-line rules,

the Court has held that—for almost all cases—the

required process to determine whether a regulation

constitutes a taking of property is the “ad hoc

factual” analysis described in Penn Central Transp.

4

Co. v. City of New York, 438 U.S. 104 (1978)

although, as the Court conceded after the first

27 years of watching lower courts struggle to apply

the Penn Central mode of analysis, “each [of the

Penn Central factors] has given rise to vexing

subsidiary questions . . . .” Lingle v. Chevron U.S.A.,

Inc., 544 U.S. 528, 539 (2005).

This case provides the Court with the

opportunity to reexamine and revise the standards

for 5th Amendment takings evaluation. Amici urge

the Court to take the opportunity and rationalize

this confused area of constitutional law.

In a nutshell, it is time for the Court to

acknowledge that its “polestar” Penn Central case is

fatally flawed.

SUMMARY OF ARGUMENT

For the good of the judicial system, and the

citizens who rely on it to protect their rights and

resolve their disputes, this Court needs to do with

Penn Central what it did with Williamson County

Reg. Plan. Agency v. Hamilton Bank, 473 U.S. 172

(1985).

In Williamson County, the Court held that a

regulatory taking case was not ripe for litigation in

federal court until the property owner had first

filed—and lost—the same case under parallel state

law in state court. It took 34 years for the Court to

acknowledge the harm done by the application of

preclusion rules through Williamson County state

court litigation, but the Court finally held in Knick

v. Township of Scott, 588 U.S. 180, 203 (2019), in

5

unusually caustic language, that Williamson County

was “not just wrong” but “exceptionally ill-founded”

and “unworkable in practice.”

The Court should similarly admit that Penn

Central was wrong, and its test has led to chaos

regarding regulatory takings.

In the 40-plus years that the courts have been

deciding regulatory takings cases, they have failed

to come up with a coherent legal standard. The hash

that has become regulatory takings law serves no

one, and the debris left behind creates only

confusion. Penn Central is neither law nor helpful.

It is no more than an aspirational hope that lower

courts will evaluate each case on its own merits.

That has allowed courts to do whatever they please.

They are tethered to no actual rules or standards

nor, as Bridge Aina Le‘a showed, do the appellate

courts even feel bound by the 7th Amendment’s antireexamination rule regarding jury factual

determinations.

It is time for the Court to retire the Penn Central

confusion and focus the inquiry, as the Court

attempted to do in Lucas v. South Carolina Coastal

Council, 505 U.S. 1003 (1992), on the impact of the

questioned regulation on the property owner’s

ability to use the property and obtain a beneficial

return on investment.

6

ARGUMENT

I

There is Conflict and Confusion on How to

Apply Penn Central—the Case This Court

Calls its “Polestar” in this Field.

It would be easy to cite treatises and law review

articles attesting to the absence of standards in

regulatory takings law and the urgent need for

guidance from this Court. (One need look no further

than the Petition for Certiorari in this case for such

a collection.)

Easy, but not necessary. The Court’s own

opinions make the point, and decisions like the one

below show the need for pragmatic and

comprehensive guidance. We can hardly improve on

this Court’s words to illustrate the problem. In

essence, the Court has conceded that it has provided

no guidance but continued in that manner anyway:

“In Justice Holmes’ well-known, if less

than self-defining, formulation, ‘while

property may be regulated to a certain

extent, if a regulation goes too far it will be

recognized as a taking.’” Palazzolo v. Rhode

Island, 533 U.S. 606, 617 (2001) (quoting

Pennsylvania Coal Co. v. Mahon, 260 U.S.

393, 415 (1922)).

“The rub, of course, has been—and

remains—how to discern how far is ‘too far.’”

Lingle, 544 U.S. at 538.

“[W]e have ‘generally eschewed’ any set

formula for determining how far is too far,

choosing instead to engage in ‘essentially

7

ad hoc factual inquiries.’” Tahoe-Sierra

Preservation Council v. Tahoe Reg. Plan.

Agency, 535 U.S. 302, 326 (2002) (quoting

Lucas, 438 U.S. at 1015 which, in turn,

quoted Penn Central, 438 U.S. at 124).

“Since Mahon, we have given some, but

not too specific, guidance to courts

confronted with deciding whether a

particular government action goes too far

and effects a regulatory taking.” Palazzolo,

533 U.S. at 617.

“Indeed, we still resist the temptation to

adopt per se rules in our cases involving

partial regulatory takings, preferring to

examine ‘a number of factors’ rather than a

simple ‘mathematically precise’ formula.”

Tahoe-Sierra, 535 U.S. at 326.

“Our polestar instead remains the

principles set forth in Penn Central itself

and our other cases that govern partial

regulatory takings.” Tahoe-Sierra, 535 U.S.

at 326, n. 23 (quoting with approval from

Palazzolo, 533 U.S. at 633 (O’Connor, J.,

concurring)).

As the Court’s words above recognized, the “rule”

created in Penn Central provides little concrete

guidance to either those judges who must apply it or

the citizens who live under it. One would have hoped

that four decades of litigation would have developed

meaningful guidelines.

8

And, yet, we have none.2 As Justice Thomas

perfectly described the Penn Central test in his

Bridge Aina Le‘a dissent: “A know-it-when-you-seeit test is no good if one court sees it and another does

not.” 141 S.Ct. at 732. What, for example, can one

make of the courts applying the identical Supreme

Court precepts and concluding that a diminution in

value of 83.4% is not sufficient to establish a taking

while a diminution of 73.1% suffices? Compare

Bridge Aina Le‘a, LLC v. Land Use Comm., 950 F.3d

610, 632 (9th Cir 2020) (83.4% diminution held no

taking) with Florida Rock Indus., Inc. v. United

States, 45 Fed. Cl. 21, 44 (1999) (73.1% diminution

held a taking).

The blunt fact is that none of the Court’s postMahon opinions—regardless of the author or the

side of the philosophical/jurisprudential divide on

which the author sat or whether the vote was close

or unanimous—improved on the directness and

simplicity of the Holmes formulation. That is what

led Justice Thomas to say: “If there is no such thing

as a regulatory taking, we should say so. And if there

is, we should make clear when one occurs.” Aina

Le‘a, 141 S. Ct. at 732 (Thomas, J., dissenting from

denial of certiorari).

The Court should take this opportunity to

provide significant clarity, or replace, the Penn

Central regulatory takings test. Judges who apply

the test sorely need this Court’s guidance, and the

individuals who can make no sense of the conflicting

outcomes need clarity. “Rudimentary justice

See generally Michael M. Berger, Whither Regulatory

Takings? 51 The Urban Lawyer 171 (2021).

2

9

requires that those subject to the law must have the

means of knowing what it prescribes.” Antonin

Scalia, The Rule of Law as a Law of Rules, 56 U. Chi.

L. Rev. 1175, 1179 (1989).

If the Court continues to believe that the country

is better off with no hard and fast rules in this

context, then a better solution would be to allow all

evidence bearing on the impact of the regulation to

be admitted and then considered by a jury, which

this Court has called “the bulwark of American

liberties.” Dimick v. Schiedt, 293 U.S. 474, 486

(1935); Chauffeurs, Teamsters, etc. v. Terry, 494 U.S.

558, 565 (1990). The jury could decide whether the

government had gone “too far.” After all, in City of

Monterey v. Del Monte Dunes at Monterey, Ltd., 526

U.S. 687 (1999), the Court held that juries could

decide liability in takings cases brought under 42

U.S.C. §1983. The same should hold for cases

brought under the Constitution. (See Michael M.

Berger, A Taking is a Taking is a Taking and Juries

Know One When They See It, 39 J. Land Use & Envt’l

L. 191, 207-09 (2024).)

II

The Playing Field Needs to be Levelled

Because Application of the Penn Central Test

Rarely Results in a Finding of a Taking.

The result of this Court’s reluctance to provide

guidance is chaos. A prominent text summed up this

Court’s regulatory takings decisions as belonging to

“the gastronomic school of jurisprudence,” that is, an

area governed by gut feeling in the individual case.

1 Norman Williams, Jr. & John M. Taylor, American

Land Planning Law 103 (2003 rev. ed.).

10

Indeed, scholars from across the ideological

spectrum have criticized Penn Central because it

offers no guidance to anyone.3 Putting things in

graphic perspective, Professor John Echeverria

titled his classic article Is the Penn Central Three

Factor Test Ready for History’s Dustbin? 52 Land

Use L. & Zon. Dig. 3 (2000).

The reason for Professor Echeverria’s caustic

title was his conclusion that property owners almost

never win Penn Central cases and any rule that is so

one-sided is plainly unworkable. Id. at 4.

That conclusion about Penn Central has been

echoed by others. See (all emphasis added) Joseph

William Singer, Justifying Regulatory Takings, 41

Ohio N.U.L. Rev. 601, 606 (2015) (“it is really hard

to win a regulatory takings claim”); Stewart E.

Sterk, The Federalist Dimension of Regulatory

Takings Jurisprudence, 114 Yale L.J. 203, 227

(2004) (“Whenever the Court conducts a Penn

Central analysis of a state or local regulation, the

regulation stands”); Daniel R. Mandelker,

Litigating Land Use Cases in Federal Court:

3 See, e.g., Joseph L. Sax, The Property Rights Sweepstakes:

Has Anyone Held the Winning Ticket?, 34 Vt. L. Rev. 157, 159

(2009) (the Penn Central inquiry is an “open-ended, I-(hope)-Iknow-it-when-I-see-it approach” to takings adjudication);

Steven J. Eagle, The Four-Factor Penn Central Regulatory

Takings Test, 118 Penn. St. L. Rev. 601, 602 (2014) (“the [Penn

Central] doctrine has become a compilation of moving parts

that are neither individually coherent nor collectively

compatible”); Echeverria, Dustbin, 52 Land Use L. & Zon. Dig.

at 7 (“the Penn Central test . . . is so vague and indeterminate

that it invites unprincipled, subjective decision making by the

courts”).

11

A Substantive Due Process Primer, 55 Real Prop.,

Trust & Estate L.J. 69, 96-97 (2020) (“a takings

claim is almost impossible to win”); Adam R.

Pomeroy, Penn Central After 35 Years: A Three Part

Balancing Test or A One Strike Rule? 22 Fed. Cir.

B.J. 677 692 (2013) (only 4 of 45 cases studied

resulted in the property owner prevailing); Mark W.

Cordes, Takings Jurisprudence as Three-Tiered

Review, 20 J. Nat. Resources & Envtl. L. 1, 35 (2006)

(“the Penn Central factors have rarely resulted in

takings being found”).

It is not just practitioners, scholars, and

academics that have noticed the uneven results of

the Penn Central test. The uneven playing field of

the Penn Central test’s application has been

recognized by judges too. District Intown Properties

Ltd. Partnership v. District of Columbia, 198 F.3d

874, 886 (D.C. Cir. 1999) (Williams, J., concurring)

(“Few regulations will flunk this nearly vacuous

test”). As Judge Bibas put it recently, “regulatorytakings doctrine is a mess.” Nekrilov v. City of Jersey

City, 45 F.4th 662, 681 (3d Cir. 2022) (concurring

opinion). As the late Judge James Oakes of the

Second Circuit put it, “[Penn Central] jurisprudence

permits purely subjective results, with the

conflicting precedents simply available as

makeweights that may fit pre-existing value

judgments . . . .” James L. Oakes, "Property Rights"

in Constitutional Analysis Today, 56 Wash. L. Rev.

583, 613 (1981).

It simply cannot be true that virtually no

regulatory taking case has merit. The problem is

with the way such regulations are evaluated.

In sum, it is time for this Court to reconsider its

12

vague “polestar” Penn Central opinion and make the

parameters clear to lower courts and litigants. The

current judicial approach de facto transforms

American common law—to borrow Justice

Frankfurter's tart imagery—into the law of “a kadi

sitting under a tree” and dispensing idiosyncratic

justice by the seat of his pantaloons, “according to

considerations

of

individual

expediency”.

Terminiello v. City of Chicago, 337 U.S. 1, 11 (1949)

(Frankfurter, J., dissenting).

III

The Key to Property Ownership is the Right

to Make Productive Use.

Regularly, since Penn Central, this Court has

repeated that, if a regulation deprives property

owners of the “economically viable use” or

“economically beneficial or productive use” of their

property, a taking has occurred. (The first

formulation appeared in Agins v. City of Tiburon,

447 U.S. 255, 260 (1980); the latter refinement

appeared in Lucas, 505 U.S. at 1015.)4

It should not require reference to a dictionary

to conclude that “economically viable, beneficial, or

productive use” means a use that is capable of

producing a present (or at least foreseeable or

4 This Court has repeated these terms almost as a mantra in

virtually every regulatory taking case it has reviewed. See, e.g.,

Dolan v. City of Tigard, 512 U.S. 374, 385 (1994); Keystone

Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470, 485

(1987); Kirby Forest Indus., Inc. v. United States, 467 U.S. 1,

14 (1984).

13

potential) income.5 A “use” that engenders a loss (or

lacks the possibility of producing a gain) cannot be

considered to be “economically viable, beneficial, or

productive.”6 If anything, such a use is economically

moribund.

The legal analysis in Lucas employs the term

“use” (generally in conjunction with “economically

beneficial” or “economically productive”) 37 times.7

See Kirby, 467 U.S. at 14 (“curtailment” of the “ability to

derive income”); Wheeler v. City of Pleasant Grove, 833 F.2d

267, 271 (11th Cir. 1987) (“potential for producing income or an

expected profit”); Nemmers v. City of Dubuque, 764 F.2d 502,

504-05 (8th Cir. 1985) (return on investment); Ranch 57 v. City

of Yuma, 731 P.2d 113, 122 (Ariz. 1986) (“a use is not

reasonable unless the landowner can make it economically

productive”).

5

Bowles v. United States, 31 Fed. Cl. 37, 48-49 (1994) (no

economically viable use where carrying and operating costs

associated with proposed use would result in economic loss);

Kempf v. City of Iowa City, 402 N.W.2d 393, 398 (Iowa 1987)

(“the cash flow income would not retire the debt”); Wheeler v.

City Pleasant Grove, 833 F.2d 267, 271 (11th Cir. 1987) (“an

injury to the property’s potential for producing income or an

expected profit”).

6

E.g., Lucas, 505 U.S. at 1016 (“economically viable use”);

1016, n. 6 (“economically viable use”; “economically beneficial

use”); 1016, n. 7 (“economically feasible use”; “economically

beneficial use”); 1017 (“beneficial use”; “productive or

economically beneficial use”); 1018 (“economically beneficial

uses”; “economically beneficial or productive options for its

use”); 1019 (“developmental uses”; economically beneficial

uses”; “economically idle”); 1019, n. 8 (“economically beneficial

use”; “productive use”); 1027 (“economically beneficial use”);

1028 (“economically valuable use”); 1029 (“economically

beneficial use”); 1030 (“economically productive or beneficial

uses”).

7

14

It does not equate a deprivation of use with

elimination of value. The Court understood the

difference.

Indeed, this Court has repeatedly said that the

proper analysis must include the ability to profit

from the use. In Penn Central, for example, this

Court emphasized that the regulations permitted

Penn Central “not only to profit from the Terminal,

but also to obtain a ‘reasonable return’ on its

investment” (438 U.S. at 136; emphasis added),

which is what saved the regulation from being a

taking. In Williamson County, 473 U.S. at 186, this

Court said that one indicator that a taking had

occurred was if the regulation interfered with the

owner’s “investment-backed profit expectations.”

(Emphasis added.) In Keystone, 480 U.S. at 485, 496,

the Court upheld Pennsylvania’s coal mining

restrictions because there was no indication that

they inhibited the mine operators’ ability to “profit”

from their properties. And, in Lucas the Court

approvingly quoted Lord Coke’s famous observation,

“for what is the land but the profits thereof[?]” 505

U.S. at 1017.

Lucas seemed clear in its conclusion that

elimination of economically beneficial or productive

use was the key to the takings issue. However,

courts like those below have converted that standard

into value, rather than use. That allows them to

hold that any residual value (or value that “returns”

after the prohibition is lifted) eliminates the

possibility of takings liability. Purporting to rely on

Tahoe Sierra, the court below held that no

categorical regulatory taking could occur because

“[t]he property clearly still had value, even if no

15

revenue or profit was generated during the closure.”

App. 32a. Put bluntly, this is illogical.

First, if Tahoe Sierra means that no

nonpermanent taking can rise to the level of a

categorical taking because the economic value of the

property returns at the conclusion of the taking, it is

wrong and should be overruled or clarified as

Petitioners suggest. As the Tahoe Sierra dissent

recognized, this legal rule could allow the

government to “repeatedly extend[] the ‘temporary’

prohibition” to avoid paying compensation. 535 U.S.

at 347 (Rehnquist, C.J, dissenting, joined by Scalia

and Thomas, JJ.). Such a distinction between

permanent and temporary is indeed “tenuous” and

ripe for abuse. Id.

Second, as the Michigan Supreme Court dissent

recognized, this case is not Tahoe Sierra. That case

involved a property development moratorium. 535

U.S. at 306. This case involves commercial

businesses that survive on day-to-day and week-toweek revenue from being open and serving the

community. It is one thing to say that a

nonpermanent prohibition on developing land may

not be a categorical taking, because the land and

ownership interest in developing the land remains

once the prohibition is lifted. It is entirely different

to say that government action forcing commercial

businesses to close for months on end is not a

categorical taking because the land upon which the

commercial business sits still holds some value. See

App. 46a (“The property at issue in Tahoe-Sierra

was land that had been subject to a development

moratorium. Once the moratorium ended, the land

could be developed. Here, by contrast, the effects of

16

the ‘temporary’ government actions might be severe

and permanent for many businesses”); see also

Jeffrey Manns, Economic Liberty Takings, 29 Geo.

Mason L. Rev. 73, 142 (2021) (“[T]he context in

Tahoe-Sierra is distinguishable from shutdowns.

The developers in Tahoe-Sierra could resume plans

for an undeveloped parcel once the moratorium was

lifted, while during the pandemic, businesses had

existing operations disrupted in many ways that

may have short- and long-run financial effects. The

severity and potentially lasting consequences of the

‘temporary’ shutdowns are very different than a

temporal delay in development.”).

Third, if upheld, this principle could allow the

government to shut down a small business for years

but avoid a categorical regulatory taking because

“the property clearly still had value” upon

reopening, “even if no revenue or profit was

generated during the closure.” Small businesses

survive due to the revenue and profit from being

open, not the inherent value of the land or property

they hold. Some may not even own the land upon

which they operate, instead paying rent to a

landlord.

When it comes to commercial businesses, like

gyms, bowling alleys, or restaurants, shutting them

down does deprive them of “all economically

beneficial uses” of their property. Lucas, 505 U.S. at

1019. As one commentator has suggested, applying

the Lucas categorical takings approach is

appropriate because “the shutdown orders that

prevent business owners and customers from

operating are constructively the equivalent of a

physical taking for the duration of the regulation.”

17

Manns, 29 Geo. Mason L. Rev. at 141. Thus,

“[t]reating this type of temporary taking as a per se

taking under the Lucas rule would better capture

the impact on businesses that have no alternative

way of operating during shutdowns.” Id.

Whether a week or a year, small business cannot

recover the lost profit from the time it was forced to

close. Even short closures can have “severe and

permanent” effects on businesses. App. 46a. And

what about the gyms that couldn’t survive the

repeated extensions of the executive order shutting

them down? See Kaitee Anderson Fernandez, How

Many Gyms Survived the Devastation that was

2020? Health & Fitness Assn. (Aug 5, 2021),

https://tinyurl.com/27sp68ct (noting nearly half of

all industry jobs were lost, 22% of gyms closed, and

the industry lost over $29 billion in revenue). What

property value remained for them?

In sum, it is not the land, but instead, the ability

to be open and serve the community that provides

entities like gyms, bowling alleys, and restaurants

an economically beneficial use of their property.

That is the stick taken from their property rights

bundle. As shown in the Petition for Certiorari, the

Court needs to return its focus in regulatory takings

cases to impact on use, rather than vague

examinations of value. Only that return to basics

will provide the protection of property owners

intended by the 5th Amendment.

18

IV

Even Legitimate Government Actions Can

Require Compensation When They Impress

Private Property into Public Service.

The government defended itself below by

claiming that its focus on protecting the public was

legitimate. The question, however, is whether

legitimacy should count for anything in this

constitutional analysis? In a word, no. The Michigan

courts allowed the third of the Penn Central factors

(the character of the government action) to

overwhelm the factors measuring economic impact

on the property owner. That needs stern correction.

The decisions below proceed as though

recognition of a legitimate governmental goal

validates whatever solution is chosen. Not relevant.

Determination of a legitimate governmental

objective is the first, not the last, step. The law

distinguishes between means and ends, and the

means chosen to achieve the objective must survive

Constitutional scrutiny the same as the ends.

Legitimate goals are constitutionally irrelevant,

although they may be legally and morally necessary.

For the proper exercise of any governmental power,

the underpinning of such a beneficent purpose must

exist. That much was settled no later than 1922,

when this Court examined a statute designed to stop

land subsidence caused by underground coal mining

and concluded that the prerequisites for exercise of

both police power and eminent domain were present:

“We assume, of course, that the statute was

passed upon the conviction that an exigency

existed that would warrant it, and we assume

19

that an exigency exists that would warrant

the exercise of eminent domain. But the

question at bottom is upon whom the loss of

the changes desired should fall.”8

More recent authority echoes that conclusion:

“the Takings Clause presupposes that the

government has acted in pursuit of a valid public

purpose.” Lingle, 544 U.S. at 543 (emphasis added).

After determining that government action was

done to achieve a legitimate goal, the means chosen

must be constitutionally examined to ensure that

private rights have not been violated. Governmental

power is not permitted to run roughshod over the

constitutionally protected rights of individuals. That

is what the Court was talking about when it

concluded in First English Evangelical Lutheran

Church of Glendale v. Los Angeles County that:

“many of the provisions of the Constitution

are designed to limit the flexibility and

freedom of governmental authorities and the

Just Compensation Clause of the Fifth

8 Pennsylvania Coal, 260 U.S. at 416 (emphasis added). See

also Florida Rock Indus., Inc. v. United States, 18 F.3d 1560,

1571 (Fed. Cir. 1994): “It is necessary that the Government act

in a good cause, but it is not sufficient. The takings clause

already assumes the Government is acting in the public

interest . . . . .” More than that, it assumes that the

Government is acting pursuant to lawful authority. If not, the

action is ultra vires and void. Compare Youngstown Sheet &

Tube Co. v. Sawyer, 343 U.S. 579 (1952) (unlawful wartime

seizure voided) with United States v. Peewee Coal Co., 341 U.S.

114 (1951) (compensation mandatory after lawful wartime

seizure).

20

Amendment is one of them.” 482 U.S. 304, 321

(1987).

Pennsylvania Coal was merely one in a long line

of decisions in which this Court—speaking through

various voices along its ideological spectrum

(Pennsylvania Coal having been authored for the

Court by Justice Holmes)—explained to regulatory

agencies that the general legal propriety of their

actions and the need to pay compensation under the

Fifth Amendment present different questions, and

the need for the latter is not obviated by the

legitimacy of the former.

The Michigan courts, however, seem not to have

gotten the message. Evidently believing that the

government was pursuing the public good, those

courts granted summary judgment. Demonstrating

the error of that theory, the dissenting opinion in

Pennsylvania Coal had argued the same, saying that

a “restriction imposed to protect the public health,

safety or morals from dangers threatened is not a

taking.”9 Eight Justices rejected that proposition.

In Loretto v. Teleprompter Manhattan CATV

Corp., New York’s highest court upheld a statute as

a valid police power exercise and dismissed an action

seeking compensation. This Court reversed:

“The Court of Appeals determined that

§ 828 serves [a] legitimate public purpose

. . . and thus is within the State’s police

power. We have no reason to question that

determination. It is a separate question,

9 260 U.S. at 417 (Brandeis, J. [Holmes’ usual constitutional

soulmate], dissenting).

21

however, whether an otherwise valid

regulation so frustrates property rights that

compensation must be paid.”10

Similarly, in Kaiser Aetna v. United States, the

Corps of Engineers decreed that a private marina be

opened to public use without compensation. This

Court reversed, explaining the relationship between

justifiable regulatory actions and the just

compensation guarantee:

“In light of its expansive authority under the

Commerce Clause, there is no question but

that Congress could assure the public a free

right of access to the Hawaii Kai Marina if

it so chose. Whether a statute or regulation

that went so far amounted to a taking,

however, is an entirely separate question.”11

Or, as the Court put it in Nollan:

“That is simply an expression of the

Commission’s belief that the public

interest will be served by a continuous

strip of publicly accessible beach along the

coast. The Commission may well be right

that it is a good idea, but that does not

establish that the Nollans (and other

coastal residents) alone can be compelled

to contribute to its realization. Rather,

California is free to advance its

‘comprehensive program,’ if it wishes, by

10 458 U.S. 419, 425 (1982) (Marshall, J.) (emphasis added).

11 444 U.S. 164, 174 (1979) (Rehnquist, J.) (emphasis added).

22

using its power of eminent domain for this

‘public purpose.’”12

That is why the Court concluded in First English

that the Fifth Amendment was designed “to secure

compensation in the event of otherwise proper

interference amounting to a taking.”13 This bedrock

principle of the law of constitutional remedies goes

back to the unanimous decision in Hurley v.

Kincaid,14 where the Court held that the remedy for

a taking resulting from valid governmental action is

just compensation, not judicial second-guessing of

governmental policies and decisions through

disruptive injunctions.15

In a similar vein are cases like Preseault v.

I.C.C.,16 Ruckelshaus v. Monsanto Co.,17 Dames &

Moore v. Regan,18 and the Regional Rail

Reorganization Act Cases.19 In each, the Court faced

the claim that Congress, in pursuit of legitimate

objectives, had taken private property without just

12 483 U.S. at 841 (Scalia, J.).

13 482 U.S. at 315 (Rehnquist, C.J.) (first emphasis, the Court’s;

second emphasis added).

14 285 U.S. 95 (1932) (Brandeis, J.).

15 Justice Brandeis’ opinion for the Court in Hurley shows his

acceptance of the Court’s holding in Mahon that takings

require compensation. Justice Brandeis had been the lone

dissenter in the latter case, expressing the belief (abandoned

in Hurley) that valid regulation does not require compensation.

16 494 U.S. 1 (1990) (Brennan, J.).

17 467 U.S. 986 (1984) (Blackmun, J.).

18 453 U.S. 654 (1981) (Rehnquist, J.).

19 Blanchette v. Conn. Gen. Ins. Corps., 419 U.S. 102 (1974)

(Brennan, J.).

23

compensation. The goal in each was legitimate

(respectively, the creation of recreational trails over

abandoned railroad rights-of-way, obtaining expert

input prior to licensing pesticides, dealing with

compensation in the aftermath of the Iranian

hostage crisis, and widespread railroad bankruptcy).

Nonetheless, the Court did not permit those

legitimate legislative goals to trump the

constitutional need for compensation when private

property was taken in the process. In each, the Court

directed the property owners to the Court of Federal

Claims20 to determine whether these exercises of

legislative power, though substantively legitimate,

nonetheless required compensation.21

“In such cases the characteristic feature is

the defendant’s use of rightful . . .

regulatory rights to control and prevent

exercise of [private] ownership rights the

20 When litigation is brought in that court, the Court of Appeals

for the Federal Circuit has consistently affirmed judgments

making the United States liable for takings that precluded

development to further proper environmental goals. E.g.,

Whitney Benefits, Inc. v. United States, 926 F.2d 1169 (Fed. Cir.

1991) (surface coal mining); Florida Rock Indus., Inc. v. United

States, 18 F.3d 1560 (Fed. Cir. 1994) (limestone mining);

Creppel v. United States, 41 F.3d. 627 (Fed. Cir. 1994)

(dredging and filling wetlands).

To this end, the 5th Amendment’s just compensation

guarantee has been held self-executing. The availability of

compensation validates and constitutionalizes the otherwise

wrongful government action. City of Monterey v. Del Monte

Dunes, 526 U.S. 687, 714-15 (1999) (Kennedy, J.); United

States v. Clarke, 445 U.S. 253, 257 (1980) (Rehnquist, J.).

21

24

defendant is unwilling to purchase and

pay for.”22

In sum, for a taking to occur, it matters not

whether the regulators acted in good or bad faith, or

for good or bad reasons. What matters is the impact

of their acts, not the purity vel non of their motives.

Indeed, if their motives are benign—or done for the

best of reasons—that only fortifies the need for

compensation required by the Just Compensation

guaranty.23

“[T]he Constitution recognizes higher

values than speed and efficiency. Indeed,

one might fairly say of the Bill of Rights in

general, and the Due Process Clause in

particular, that they were designed to

protect the fragile values of a vulnerable

citizenry from the overbearing concern for

efficiency

and

efficacy

that

may

characterize praiseworthy government

officials no less, and perhaps more, than

mediocre ones.”24

Thus, it is not enough to conclude that it is a good

thing to protect the populace from disease. As a

22 Florida Rock Indus., Inc. v. U.S., 791 F.2d 893, 899 (Fed. Cir.

1986) (quoting with approval; emphasis the Court’s). See also

Whitney Benefits, 926 F.2d at 1177; Skaw v. United States, 740

F.2d 932, 939 (Fed. Cir. 1984).

23 See Hughes v. State of Washington, 389 U.S. 290, 298 (1967):

“[T]he Constitution measures a taking of property not by what

a State says, or by what it intends, but by what it does.”

(Stewart, J., concurring) (emphasis added).

Stanley v. Illinois, 405 U.S. 645, 656 (1972) (footnote

omitted). See also Shelton v. Tucker, 364 U.S. 479, 488 (1960).

24

25

matter of Constitutional policy, severe invasions of

protected property rights cannot occur unless

compensation is paid. Such radical change cannot be

accomplished with the stroke of a word processor.

If Michigan believes that the idea is otherwise

worthwhile then, as this Court put it in Nollan,

“it must pay for it.” 483 U.S. at 842.

CONCLUSION

It should be apparent that this Court’s desire to

refrain from establishing overly firm rules has not

served well. That desire leads to the other extreme

and allows so much flexibility to lower courts that

this constitutional field is left with no real standards

at all. The result is a continuous roiling of the

litigational waters, with a steady stream of

academic criticism and certiorari petitions which

should be unnecessary. Certiorari should be

granted, the result overturned, and the law

rationalized.

Respectfully Submitted,

MICHAEL M. BERGER

MANATT, PHELPS & PHILLIPS, LLP

2049 Century Park East, Suite 1700

Los Angeles, CA 90067

(310) 312-4000

mmberger@manatt.com

Counsel for Amici Curiae

National Federation of Independent

Business Small Business Legal Center,

Inc. and Owners Counsel of America