Amicus Curiae Brief — Horne v. Dep't of Agric., 135 S. Ct. 1039 (2015) (No. 14-275)

‘Supreme Court, US.

FILED

OCT - 8 204

No. 14-275 OFFICE OF THE CLERK

In the Supreme Court of the Anited States

MARVIN D. HORNE, ET AL., PETITIONERS

UNITED STATES DEPARTMENT OF AGRICULTURE

ON PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

BRIEF FOR THE CHAMBER OF COMMERCE OF

THE UNITED STATES OF AMERICA AS AMICUS

CURIAE IN SUPPORT OF PETITIONERS

KATE COMERFORD TODD

SHELDON GILBERT

U.S. CHAMBER LITIGATION

CENTER

1615 H Street, NW

Washington, DC 20063

(202) 463-5337

JOHN P. ELWOOD

Counsel of Record

JEREMY C. MARWELL

VINSON & ELKINS LLP

2200 Pennsylvania Ave.,

NW, Suite 500 West

Washington, DC 20037

(202) 639-6500

jelwood@velaw.com

J. ERIC PARDUE

VINSON & ELKINS LLP

1001 Fannin Street,

Suite 2500

Houston, TX 77002

Attorneys for Amicus Curiae

TABLE OF CONTENTS

Page

ee ED cnctnserenenecneccninnesssasesensnerentenntamnings II

Sr FD GIG cccerestnenccessnnentinnmenticementacen 1

I as 3

I cicsciciiniesinitinnesinenseniandncnremnnininscnmnneinstiantinns 4

I. Diluting The Per Se Physical Takings

Doctrine Will Have Serious Negative

Effects On Property Rights Nationwide........... 4

A. The Per Se Physical Takings Rule Is

An Important Bulwark For Private

Pe nceinnteardumecnpecsnensmetinmneiinin 5

B. The Panel’s Doctrinal Error Affects

Private Property Rights In A Broad

ER 13

C. The Decision Creates Sharp Conflicts

Of Authority By Analyzing A Physical

Taking Of Personal Property Under A

Fact-Intensive Balancing Test................ 19

Il. The Panel’s “Use Restriction” Theory Guts

Protections For Personal Property ................. 23

TEI IIIITIIIIIS -strsianinnsstcdieccinninaiasinntegedaninnnegdainiediiies iielesietiadibecmed 25

Il

TABLE OF AUTHORITIES

Cases: Page(s)

Am. Needle, Inc. v. Natl Football League,

kL SE nee 15

Biotechnology Indus. Org. v. District of Columbia,

496 F.3d 1362 (Fed. Cir. 2007) ...........0ccc0c0ce0e0e- 18

Brown v. Legal Found. of Wash..,

Eee a 21

City of Oakland v. Oakland Raiders,

646 P.2d 835 (Cal. 1982) ...............2.cccceeeeeeee 14,18

Dolan v. City of Tigard,

ee passim

E. Enters. v. Apfel, 524 U.S. 498 (1998)............... 6, 7

Gonzales v. Raich, 545 U.S. 1 (2005) ..................... 24

Innovair Aviation, Ltd. v. United States,

itll 17, 18

Lee v. City of Chicago,

330 F.3d 456 (7th Cir. 2003) ................. 16, 17, 21

Loretto v. Teleprompter Manhattan CATV Corp.,

aia niacrier carina passim

Lucas v. S.C. Coastal Council,

| ee a

Milwaukee & Suburban Transport Corp. v.

Milwaukee County,

263 N.W.2d 503 (Wis. 1978).................. 15, 16, 18

Nixon v. United States,

978 F.2d 1269 (D.C. Cir. 1992) ......... 9, 17, 19, 20

Nollan v. Cal. Coastal Comm'n,

| Cesare passim

iil

Cases—Continued: Page(s)

Palazzolo v. Rhode Island,

TE cae 6, 7

Penn Central Transp. Co.

v. New York City, 438 U.S. 104 (1978)....... 5-6, 17

Pennsylvania Coal Co. v. Mahon,

SI TD iiaiin ie rdtmienrnecnnsseunnaensannatte 6

Philip Morris, Inc. v. Reilly,

Ne Be eee re Ce GI, BR icctccncccccocceccccvessescncess 21

R.J. Widen Co. v. United States,

357 F.2d 988 (Ct. Cl. 1966) ......................... 21, 22

Rose Acre Farms, Inc. v. United States,

373 F.3d 1177 (Fed. Cir. 2004).................... 20, 21

Seery v. United States,

161 F. Supp. 395 (Ct. Cl. 1958)......................... 22

Store Safe Redlands Assocs. v. United States,

I site 7

Tahoe-Sierra Pres. Council v. Tahoe Regi

Planning Agency,

ial 6, 9, 12, 24

United States v. Pewee Coal Co.,

4 A Seen Nn ee 9

Williamson Cnty. Reg Planning Comm'n v.

Hamilton Bank of Johnson City,

| | i Eee 6

Yee v. City of Escondido, 503 U.S. 519 (1992) ......... 6

Statutes:

D.C. Code §§ 28-4551-28-4555..0....ccccccccccsesssseseseeee 18

Other Authorities: Page(s)

Bruce A. Ackerman, Private Property

and the Constitution (1977).............cccccccecceeeceeeeee 8

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)..................... 10

J. Peter Byrne, Ten Arguments for the Abolition

of the Regulatory Takings Doctrine,

22 Ecology L.Q. 89 (1995)..............ccccceceeeeeeeeeeeeees 8

Stephen Durden, Unprincipled Principles:

The Takings Clause Exemplar,

3 Ala. C.R. & C.L. L. Rev. 25 (2013)............000.... 9

Richard A. Epstein, The Seven Deadly Sins of

Takings Law: The Dissents in Lucas v. South

Carolina Coastal Council,

26 Loy. L.A. L. Rev. 955 (1993)..............0..cc.ceceeee 8

John E. Fee, The Takings Clause as a

Comparative Right,

76 S. Cal. L. Rev. 1003 (2003).......................00000 8

Mark Fenster, Takings Formalism and Regulatory

Formulas: Exactions and the Consequences of

Clarity, 92 Cal. L. Rev. 609 (2004)............ passim

Charles Gray, Keeping the Home Team at Home,

74 Cal. L. Rev. 1329 (1986) ...................cceeeeeeees 14

C. Haar, Land-Use Planning (3d ed. 1976) ............. 6

Leon F. Mead II, Raiders: $72 Million,

City of Oakland: 0...Was That the Final Gun -

A Story of Intrigue, Suspense and

Questionable Reasoning,

9 Loy. L.A. Ent. L. Rev. 401 (1989)............. 14, 15

Vv

Other Authorities—Continued: Page(s)

Marc R. Poirier, The Virtue of Vagueness in

Takings Doctrine,

24 Cardozo L. Rev. 93 (2002) ................0000.0.. 8, 10

Carol M. Rose, Mahon Reconstructed: __

Why the Takings Issue Is Still a Muddle,

57 S. Cal. L. Rev. 561 (1984)......................... 9, 10

Susan Rose-Ackerman, Against Ad Hocery: A

Comment on Michelman,

88 Colum. L. Rev. 1697 (1988).................... 11,12

Joseph L. Sax, Takings and the Police Power,

A ks Be Gi icccccccncecccscnecestcsenesebcccsoocscces 9

Patrick Wiseman, When the End Justifies the

Means: Understanding Takings Jurisprudence

in a Legal System with Integrity,

63 St. John’s L. Rev. 433 (1988)................0...0... 10

INTEREST OF AMICUS CURIAE'

Founded in 1912, the Chamber of Commerce of

the United States of America (“Chamber”) is the

world’s largest business federation. The Chamber

represents 300,000 direct members and indirectly

represents an underlying membership of more than

three million businesses and professional

organizations of every size, in every industry sector,

and from every region of the county. More than 96

percent of the Chambers members are small

businesses with 100 or fewer employees. The

Chamber represents the interests of its members in

matters before Congress, the Executive Branch, and

the courts.

The Chamber regularly files amicus briefs in cases

that raise issues of vital concern to the Nation’s

business community, including cases defending

constitutional protections for private property rights

against government infringement. The Chamber

filed briefs amicus curiae supporting property owners

when this case was last before this Court as Horne v.

Dep't of Agriculture, No. 12-123, leading to a

unanimous reversal of the Ninth Circuit’s prior

judgment, and also in Koontz v. St. Johns River

Water Management District, No. 11-1447, which

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

and no counsel or party made a monetary contribution to fund

the preparation or submission of this brief. No person other

than the amicus curiae, its members, and its counsel made anv

monetary contribution to its preparation and submission. The

parties have consented to this filing, with timely notice from

amicus of its intent to file.

(1)

2

resulted in a property-rights-protective ruling that

supports petitioners in this case.

On remand from its prior reversal in this Court,

the Ninth Circuit again sharply departed from this

Court’s longstanding takings jurisprudence, adopting

a dangerous new test that guts property rights

protections. The decision is of grave 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 real and personal

property. Historically, the property rights of

Chamber members have been subject to infringement

in a wide range of areas, including through laws, like

those at issue here, which impose monetary fines or

penalties as a proxy for outright physical

appropriation of private property.

The Ninth Circuit held here that a federal law

requiring petitioners to transfer title to the

government of a substantial portion of their annual

raisin crop—or face a fine, including an amount equal

to the value of the raisins which the government

demanded be handed over—was not a categorical

“taking,” and thus was protected under the Fifth

Amendment, if at all, only by the “nexus and rough

proportionality” standard formerly limited to land-

use exactions, or the general ad hoc regulatory

takings doctrine. Adding insult to injury, the panei

sought to defend its rule by suggesting that

petitioners could avoid the expropriation simply by

abandoning the market and their life-long vocation by

producing something other than raisins. The Ninth

Circuit’s radical decision creates significant doctrinal

confusion and_ substantially weakens Fifth

3

Amendment rights, with wide-ranging consequences

for business interests and private property holders

nationwide.

SUMMARY OF ARGUMENT

The panel decision improperly conflates the

categorical framework long applicable to permanent

physical occupations of property with the more fact-

intensive analysis used for regulatory takings—

including a balancing test that this Court has

traditionally reserved for land-use exactions. In

particular, the panel’s holding that Loretto v.

Teleprompter Manhattan CATV Corp., 458 U.S. 419

(1982), is inapplicable when the government

appropriates personal property represents a

dangerous retreat from a bright-line rule that has

long served as an important bulwark for property

rights, and conflicts with the weight of this Court’s

and lower-court authority.

The panel decision threatens private property

rights in a broad range of contexts, and creates

dangerous incentives for the government to disguise

traditional takings in an effort to reframe the

governing legal analysis and exploit the loophole

created by the panel’s novel doctrinal approach.

Personal property is no less at risk of government

interference—and thus no less deserving of the

certainty and predictability provided by a per se rule

for physical takings—than real property. Case

reporters are replete with examples of the

government appropriating personal property,

illustrating the diverse forms of interference with,

and abuse of, property rights that the panel decision

effectively green-lights.

4

The panel decision also creates numerous conflicts

of authority by holding that Loretto is inapplicable to

personal property, that just compensation is not

required where a property owner retains some

theoretical right to proceeds from the property or

benefit from a regulatory scheme, and that a

permanent physical occupation can be reframed as a

mere “use restriction.”

The Chamber and its members have grave

concerns about the panel’s “use restriction” theory, in

particular, which amounts to the unprecedented and

indefensible notion that the government can

condition a property owner’s ability to sell goods into

the market on its agreement to transfer title over a

significant fraction of its property to the government.

That dangerous idea is anathema to bedrock

principles of private property rights, and admits to no

principled limitation. Even absent the conflicts of

authority generated by the panel’s decision, this

Court’s review would be urgently warranted—to

reaffirm that a taking occurs whenever the

government physically occupies or appropriates

private property, and to avert dire effects on business

interests and private property rights nationwide by

inviting governments to reframe appropriations as

mere “use restrictions.”

ARGUMENT

I. Diluting The Per Se Physical Takings

Doctrine Will Have Serious Negative Effects

On Property Rights Nationwide

As petitioners explain, the panel erred, and

departed from the approach of numerous other

5

courts, by holding that: (1) the government's

appropriation of a portion of petitioners’ raisin crop

does not constitute a per se physical taking of private

property under Loretto; (2) there was no per se taking

because petitioners purportedly retained a

contingent, theoretical interest in the raisins or

enjoyed indirect benefits from the regulatory program

as a whole; and (3) whether the regulation effects a

categorical taking is governed by the “nexus and

rough proportionality” balancing test for land-use

exactions under WNollan v. California Coastal

Commission, 483 U.S. 825 (1987) and Dolan v. City of

Tigard, 512 U.S. 374 (1994). Amicus complements

that analysis by illustrating how the panel decision

will have wide-ranging negative practical effects on

private property rights, by highlighting the ways in

which the decision conflicts with established

precedent and creates doctrinal confusion, and by

explaining how it harms important interests that are

well served by the longstanding categorical rule.

A. The Per Se Physical Takings Rule Is An

Important Bulwark For Private Property

Rights

The panel’s basic doctrinal innovation—i.e.,

analyzing a physical taking of petitioners’ raisins

under a more fact-intensive regulatory standard than

Loretto’s per se rule—undermines important interests

of predictability and clarity reflected in this Court’s

development of categorical rules for particular classes

of takings.

Regulatory takings have long been governed by

the “essentially ad hoc, factual inquiry” set forth in

Penn Central Transportation Co. v. New York City,

6

438 U.S. 104, 124 (1978); see also E. Enters. v. Apfel,

524 U.S. 498, 523 (1998) (plurality opinion). By

design and practical effect, that approach 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 that “well-known, if less

than self-defining” question, Palazzolo v. Rhode

Island, 533 U.S. 606, 617 (2001), of whether a

particular regulation “goes too far,” Pennsylvania

Coal Co. v. Mahon, 260 U.S. 393, 415 (1922). That

approach stems from the pragmatic concern that

subjecting “regulations prohibiting private uses [of

property)” to a categorical takings rule “would

transform government regulation into a luxury few

governments could afford,” given the “ubiquit[y]” of

such regulations in the modern era. Tahoe-Sierra

Pres. Council, Inc. v. Tahoe Reg? Planning Agency,

535 U.S. 302, 323-324 (2002). But the regulatory

takings test has, in practice, become a famously

“difficult problem”; “The attempt to determine when

regulation goes so far that it becomes, literally or

figuratively, a ‘taking’ has been called the ‘lawyer's

equivalent of the physicist’s hunt for the quark.”

Williamson Cnty. Regl Planning Comm’n vy.

Hamilton Bank of Johnson City, 473 U.S. 172, 199-

200 & n.17 (1985) (quoting C. Haar, Land-Use

Planning 766 (3d ed. 1976)).

This complex and fact-intensive approach for

regulatory takings analysis imposes significant costs

on property owners and litigants, and burdens the

exercise of private property rights. “[A] party

challenging governmental action as an

unconstitutional taking bears a substantial burden,”

7

E. Enters., 524 U.S. at 523, in navigating the

complex, ad hoc, regulatory-takings framework. In

addition to requiring property owners to adduce proof

on a wide range of issues (such as a regulation’s

“economic effect on the landowner,” interference with

“reasonable investment-backed expectations,” and

“the character of the government action,” Palazzolo,

533 U.S. at 617), the regulatory takings doctrine

necessarily deprives property owners of predictability

and certainty. “Cases attempting to decide when a

regulation becomes a taking are among the most

litigated and perplexing in current law.” E. Enters.,

524 U.S. at 541 (Kennedy, J., concurring in the

judgment and dissenting in part); see also Store Safe

Redlands Assocs. v. United States, 35 Fed. Cl. 726,

729 (1996) (“Since 1922, the Supreme Court has

applied a test in regulatory taking cases that is seen

by many as so fact specific that general predictability

is made very difficult.”). Governments, too, suffer

costs and uncertainty from unpredictable legal rules.

See E. Enters., 524 U.S. at 542 (Kennedy, J.)

(“boundarfies] for application of the regulatory

takings rule provid[e] some necessary predictability

for governmental entities”).

Similar concerns have been raised about the

balancing test from Nollan and Dolan, which the

Ninth Circuit extended to personal property.

Although the “essential nexus” and “rough

proportionality” standards have been viewed by some

as “apply[ing] heightened scrutiny to challenged land

use regulations,” Mark Fenster, Takings Formalism

and Regulatory Formulas: Exactions and _ the

Consequences of Clarity, 92 Cal. L. Rev. 609, 622

(2004), by their terms they “are hardly beacons of

8

clarity,” Marc R. Poirier, The Virtue of Vagueness in

Takings Doctrine, 24 Cardozo L. Rev. 93, 107 n.55,

191 (2002); see also Fenster, 92 Cal. L. Rev. at 629,

630 (Nollan and Dolan are “less clear than * * * rules

defining per se regulatory takings as those that result

in * * * permanent physical occupation,” and “neither

metric is exceptionally clear”). Nollan and Dolan

require courts to grapple with a range of fact-

intensive issues, including the “causal relationship

between the harm of the proposed new use for the

property, the regulation upon which the government

relies in requiring the challenged concessions, the

cost of the concessions, and the likelihood that the

concessions would mitigate the harms.” Fenster, 92

Cal. L. Rev. at 629-630; see also Pet. App. 26a-28a

(analyzing purpose and performance of raisin

marketing order for means-ends analysis).

In part for these reasons, ad hoc regulatory

takings doctrines have engendered sharp criticism.

See, e.g., Bruce A. Ackerman, Private Property and

the Constitution 8 (1977) (describing regulatory

takings doctrine as “a chaos of confused argument”);

Richard A. Epstein, The Seven Deadly Sins of

Takings Law: The Dissents in Lucas v. South

Carolina Coastal Council, 26 Loy. L.A. L. Rev. 955,

966 (1993) (takings test is “so amorphous as to defy

description”); J. Peter Byrne, Ten Arguments for the

Abolition of the Regulatory Takings Doctrine, 22

Ecology L.Q. 89, 102 (1995) (an “unworkable muddle”

that “has generated a plethora of inconsistent and

open-ended formulations that have failed to make

sense”); John E. Fee, The Takings Clause as a

Comparative Right, 76 S. Cal. L. Rev. 1003, 1006-

1007 (2003) (“[a] jurisprudential mess”); Carol M.

9

Rose, Mahon Reconstructed: Why the Takings Issue Is

Still a Muddle, 57 S. Cal. L. Rev. 561, 562 (1984)

(“[(C]lommentators propose test after test to define

‘takings,’ while courts continue to reach ad hoc

determinations rather than principled resolutions.”);

Joseph L. Sax, Takings and the Police Power, 74 Yale

L.J. 36, 37 (1964) (“a welter of confusing and

apparently incompatible results”); Stephen Durden,

Unprincipled Principles: The Takings Clause

Exemplar, 3 Ala. C.R. & C.L. L. Rev. 25, 27-28 (2013)

(describing doctrine as “famously incoherent and a

mess, a muddle (or muddled), confused, incompre-

hensible, standardless, and unprincipled” (internal

quotation marks omitted); collecting authorities).

In contrast to this fact-intensive, ad hoc approach,

this Court has carved out several bright-line,

categorical rules in areas where clarity is particularly

important and “in-depth ffactual inquiry”

unnecessary. Nixon v. United States, 978 F.2d 1269,

1284 (D.C. Cir. 1992). Most obviously, “[w]hen the

government physically takes possession of an interest

in property for some public purpose,” the existence of

a taking is typically self-evident and the government

is categorically required to pay just compensation.

Tahoe-Sierra, 535 U.S. at 322 (citing United States v.

Pewee Coal Co., 341 U.S. 114, 115 (1951)). And this

Court has enforced the categorical rules that a taking

occurs whenever there is a permanent physical

occupation, Loretto, 458 U.S. at 426, or a deprivation

of all economically beneficial use of private property,

Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1019

(1992).

Commentators have lauded these per se rules for

providing predictability and certainty for property

10

owners—“a ray of light in the otherwise shadowy

area 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). Among its

other virtues, under Loretto’s per se rule, “it is easy to

tell when the rule has been violated—a boundary is

traversed.” Poirer, 24 Cardozo L. Rev. at 108. Asa

result, property owners face a less onerous burden in

defending and litigating their rights, and

governments gain predictability and certainty in the

conduct of public affairs, and are subject to the full

financial deterrent of the just-compensation

guarantee. See Loretto, 458 U.S. at 437 (“[W]hether a

permanent physical occupation has occurred presents

relatively few problems of proof.”).

The clarity of these categorical rules also promotes

important interests related to private property

rights—interests sharply undermined by the Ninth

Circuit’s diluted approach in this case. A per se rule

allows property owners to make investments based

on concrete expectations about the risk of government

interference. See Patrick Wiseman, When the End

Justifies the Means: Understanding Takings

Jurisprudence in a Legal System with Integrity, 63 St.

John’s L. Rev. 433, 457-458 (1988) (“Insofar as

property is conceptually a set of expectations, any

rule which tends to settle expectations is, in that

respect at least, a good rule.”); Carol M. Rose,

Crystals and Mud in Property Law, 40 Stan. L. Rev.

577, 577 (1988) (“hard-edged rules like these * * * are

what property is all about”). Put differently,

“[tlakings law should be predictable *** so that

private individuals confidently can commit resources

11

to capital projects.” Susan Rose-Ackerman, Against

Ad Hocery: A Comment on Michelman, 88 Colum. L.

Rev. 1697, 1700 (1988). Conversely, “ad hoc

balancing is impossible to reconcile with a belief in

the importance of preserving ‘investment-backed

expectation(s].”” Ibid.

Doctrinal clarity does much to preserve and

protect property owners investment-backed

expectations. See Rose-Ackerman, 88 Colum. L. Rev.

at 1711. By creating certainty that a physical

invasion of property will result in just compensation,

the per se rule establishes appropriate ex ante

incentives for property owners, who will be secure in

the knowledge that any physical invasion or

occupation of property by the government is a

compensable taking, whatever its scope or extent.

See Loretto, 458 U.S. at 438 n.16 (“[W]hether the

installation is a taking does not depend on whether

the volume of space it occupies is bigger than a

breadbox.”). And “property owners and investors who

believe that a rule-bound regulatory regime better

protects their expectations than does an ad hoc

balancing test in theory will commit more resources

to capital projects, therefore enabling the highest and

best use of property.” Fenster, 92 Cal. L. Rev. at 620.

Under Loretto’s bright-line rule, a property owner

can make decisions relevant to investments—e.z.,

about acquiring property in the first instance,

improving or developing existing holdings, or valuing

property for future sale—based on a_ secure

understanding that any physical occupation of

property must be compensated. “By offering clear

declarations of the extent of property owners’

constitutional rights and limiting the discretion of

12

judges and administrative decision makers, clear

rules ensure fair and value-neutral coherence,

regularity, and predictability across disparate,

individual cases.” Fenster, 92 Cal. L. Rev. at 619.

Moreover, doctrinal uncertainty under the ad hoc

regulatory takings framework not only makes

investors uncertain “whether or not damages will be

paid,” but also, if damages are not paid, means that

“investors will be left bearing the costs of an

uninsurable risk.” Rose-Ackerman, 88 Colum. L.

Rev. at 1700. From the perspective of optimizing the

allocation of valuable resources, “[t]o the extent that

investors are risk averse, the very incoherence of the

doctrine produces inefficient choices.” Ibid.

The per se rule also creates salutary incentives for

the government, discouraging gamesmanship or

efforts to reframe traditional “takings” to exploit

doctrinal loopholes or ambiguities. Under a per se

rule, the government’s rationale for appropriating

private property does not matter; so long as there is

physical appropriation, a compensable taking has

occurred. See Tahoe-Sierra, 535 U.S. at 323 (“we do

not ask whether a physical appropriation advances a

substantial government interest” under the “clear

rule” governing “categorical taking[s]”). Under the

panel’s interpretation, by contrast, the government

can physically appropriate personal property without

any categorical obligation to compensate the owner,

so long as the regulation satisfies the “nexus and

rough proportionality” principles of Nollan and

Dolan. Pet. App. 23a.

Uncertainty about how the fact-intensive and ad

hoc legal standard will be applied to any given set of

facts also reduces the anticipated cost of a taking for

13

the government, essentially discounting the rate of

compensation by the possibility that the factfinder

will conclude no compensation is owed. That

uncertainty not only affects the government’s choices,

but also changes how property owners interact with

the government. “By providing a doctrinal shield

against the intrusive overregulation of local

governments, formal takings rules smooth the

‘frictions’ caused by the struggles over regulatory

indeterminacy and uncertainty, stabilizing and

protecting property rights within the present

distribution of property ownership and entitlements.”

Fenster, 92 Cal. L. Rev. at 620.

In short, the Ninth Circuit’s decision undermines

important interests critical to the protection of

private property rights by replacing the safety of a

categorical rule with the fact-intensive ad hoc

balancing test of Nollan and Dolan.

B. The Panel’s Doctrinal Error Affects

Private Property Rights In A Broad

Range of Contexts

The panel decision’s practical consequences sweep

far beyond the Depression-era agricultural

regulations at issue in this case to affect property

owners in many other areas. Federal and state case

reporters are replete with examples of government

attempts to appropriate or occupy personal property,

highlighting the important and continuing role of a

per se rule in protecting property rights. These cases

vividly illustrate how the Ninth Circuit’s approach, if

applied to a range of other facts, would create

incentives for strategic behavior, inviting

governments to restructure regulations that effect de

14

facto physical appropriation of personal property in a

manner that avoids paying just compensation. These

cases also undercut any suggestion that the practical

need for a categorical, per se rule for personal

property is any less acute than in the context of real

property.

One colorful example arose in City of Oakland v.

Oakland Raiders, 646 P.2d 835 (Cal. 1982). In 1980,

the Oakland Raiders franchise of the National

Football League announced its intention to move to

Los Angeles. In response, the City of Oakland

initiated an eminent domain proceeding to prevent

the move by “acquir[ing] by eminent domain the

property rights associated with [the Raiders’

ownership of a professional football team as a

franchise member of the National Football League.”?

Id. at 837. The California Supreme Court held that

the Raiders’ property interests were condemnable

under California law, bringing into sharp focus the

importance of constitutional takings protection.

The California Supreme Court approached the

case apparently without ever questioning that

assuming possession and ownership of the team

2 For a more detailed history, see Leon F. Mead LI, Raiders:

$72 Million, City of Oakland: 0...Was That the Final Gun - A

Story of Intrigue, Suspense and Questionable Reasoning, 9 Loy.

L.A. Ent. L. Rev. 401 (1989). Oakland is not the only city

tempted by this tactic. Maryland authorized the City of

Baltimore to use eminent domain to prevent the NFL’s Colts

franchise from moving to Indianapolis. See Charles Gray,

Keeping the Home Team at Home, 74 Cal. L. Rev. 1329, 1330-

1331 & n.14 (1986).

15

would constitute a taking. But under the Ninth

Circuit’s formulation, it is far from clear whether that

assumption would hold true, given that the various

property rights that make up a football franchise

(e.g., trademarks, player contracts) were personal,

not real, property. Moreover, in the wake of the

panel’s ruling here, it is not hard to imagine how

Oakland could have altered its strategy to fit the

panel’s loophole. For instance, the City might have

demanded a fractional interest in the team in the

event its owners chose to relocate, perhaps in service

of a stated goal of regulating the “market” for

professional football services. Or the City might have

made the team less valuable by taking title to a

certain fraction of the tickets offered, again in the

guise of market regulation. Under the panel’s

approach, a court might conclude that such a

regulation was a mere “use” restriction that satisfied

the “nexus and rough proportionality” test of Nollan

and Dolan, so long as the Raiders were theoretically

entitled to any residual value after the City disposed

of the tickets.

In Milwaukee & Suburban Transport Corp. v.

Milwaukee County, 263 N.W.2d 503 (Wis. 1978),

3 In the cited decision, the California high court held that

whether taking the team was a “public use” was a jury question;

the Raiders ultimately prevailed on public use, antitrust, and

Commerce Clause grounds, effectively rejecting the City’s

attempt to condemn the franchise. See Mead, supra note 2, at

406-407. But there is little reason to believe those alternate

protections will be present in a typical case. Cf. Am. Needle, Inc.

v. Natl Football League, 130 S. Ct. 2201, 2216 (2010) (noting

“special characteristics” of National Football League relevant to

antitrust analysis).

16

Milwaukee County condemned the assets of a private

bus system and began operating the system under

public ownership. See id. at 508 (“There was no

interruption of service. The same buses were driven

on the same routes by the same employees.”). Again,

it is far from clear that Milwaukee's view of the

transaction as a paradigmatic taking, in which the

County expressly appropriated the bus system, would

survive the panel’s holding that Loretto applies only

to real property. In any event, the County might

have restructured its takeover to fall under the

panel's balancing-test framework, potentially

exempting itself from any obligation to pay

compensation. For example, rather than “taking” the

entire bus system, the County could have required

the private owners to accept a certain number of

riders who present bus fares sold by the County—in

the vernacular of the raisin marketing order, setting

aside for public use a “reserve” portion of all bus

seats, which the County could dispose of as it sees fit,

perhaps with the possibility of a contingent future

benefit to the bus company. The Ninth Circuit’s

decision here suggests even those egregious actions

would not be subject to a per se physical takings test.

Of course, appropriation of personal property can

also occur when a government initially seizes

property for a purpose other than eminent domain.

In Lee v. City of Chicago, police impounded an

innocent bystander’s private vehicle for investigation

because it had been struck by a stray bullet. 330

F.3d 456 (7th Cir. 2003). After the investigation, the

owner discovered that the City had painted large red

inventory numbers on three sides of the vehicle. Jd.

at 459. Although the case was not litigated on

17

takings grounds, Judge Wood concluded that the

plaintiff had “suffered [a] * * * taking: governmental

authorities physically took some of his personal

property for a public purpose and kept it for a period

of time.” Id. at 474 (Wood, J., concurring). Notably,

she cited Loretto in concluding that “[a]ny physical

occupation is enough [for a taking], even where the

owner retains at least some use.” Jd. at 475. But

under the Ninth Circuit’s analysis, Loretto would not

apply, because a car is personal, not real, property,

and because any takings claim would be relegated to

the “nexus and rough proportionality” standard from

Nolian and Dolan, or the ad hoc balancing test for

regulatory takings.

To similar effect, the plaintiff in Jnnovair

Aviation, Ltd. v. United States, 72 Fed. Cl. 415

(2006), rev'd on other grounds, 632 F.3d 1336 (Fed.

Cir. 2011), was completing the turboprop conversion

of certain airplanes that were under contract to Air

Colombia when the U.S. government seized the

planes, claiming that Air Colombia was a front for

drug cartels that allegedly purchased the airplanes

with drug proceeds. 72 Fed. Cl. at 416-418. The

plaintiff sought compensation for the taking of the

planes. Jd. at 419. The court held that the seizure

was a per se taking of the plaintiff's private property,

analogizing to Loretta, instead of Penn Central

because “[h]ere we have the total destruction of the

Plaintiffs property.” Jd. at 423. Citing Nixon, 978

F.2d 1269 (discussed below and at Pet. 18-19), the

court rejected the government’s contention that the

per se takings analysis only applies to real property,

noting that there, as in Nixon, “the Plaintiffs

personal property was permanently and completely

18

appropriated by the Government.” 72 Fed. Cl. at 423.

Innovair ultimately fouud that the plaintiff had

suffered a compensable taking when the government

physically occupied its personal property. Under the

panel’s analysis, that clear-cut approach would be

replaced with a far more uncertain, ad hoc inquiry.

These cases provide just a few examples of how

the panel’s holding encourages gamesmanship and

strategic behavior, as governments will rationally

seek to avoid paying compensation. As City of

Oakland and Milwaukee illustrate, governments

often have strong financial, practical, or other

incentives to appropriate personal property, and to

disguise the true costs of those choices—in a wide

range of substantive areas. One recent Washington,

D.C. law prohibited patented drugs from being sold in

the District for an “excessive” price, requiring drug

manufacturers to rebut a_ presumption of

excessiveness if the price of a drug is more than 30%

higher than in the United Kingdom, Germany,

Canada, or Australia. See Prescription Drug

Excessive Pricing Act of 2005, codified at D.C. Code

§§ 28-4551-28-4555. That statute represented a clear

attempt to disguise the true fiscal cost of providing a

public benefit—shifting the cost of subsidized drugs

from taxpayers (who otherwise would have to use

public funds) to a drug’s’ imventors§ and

manufacturers. See Biotechnology Indus. Org. v.

District of Columbia, 496 F.3d 1362, 1374 (Fed. Cir.

2007) (“The Act is a clear attempt to * * * diminis[h]

the reward to patentees in order to provide greater

benefit to District drug consumers.”). Under the

Ninth Circuit’s reasoning, the District could have

achieved the same goal by requiring pharmaceutical

19

companies physically to provide low-income residents

with patented drugs free of charge.

If Loretto’s per se rule is wholly inapplicable to

personal property, public officials will shift their

strategy away from forthright use of eminent domain

and toward regulatory regimes that achieve a similar

practical outcome on the cheap. The Ninth Circuit's

decision opens a back door to abusive government

actions, despite this Court’s efforts to bar those

approaches though per se rules about physical

occupation.

C. The Decision Creates Sharp Conflicts Of

Authority By Analyzing A _ Physical

Taking Of Personal Property Under A

Fact-Intensive Balancing Test

As petitioners explain, the panel erred and

departed from the approach of numerous other

courts, by holding that Loretto’s categorical rule for

permanent physical occupations of property does not

apply to “controversies involving personal property”

or where property owners retain some contingent

benefit from government expropriation, and by re-

characterizing a physical appropriation as a “use”

restriction subject to the balancing test from Nollan

and Dolan. Pet. App. 20a; Pet. 15-20. Amicus

supplements those arguments and identifies other

authorities with which the panel decision conflicts.

As the petition notes, Pet. 18, a leading case is

Nixon v. United States, 978 F.2d 1269 (D.C. Cir.

1992), in which the former President challenged

regulations promulgated under the Presidential

Records and Materials Preservation Act of 1974

effectively “authoriz[ing] the Administrator of

20

General Services to retain complete possession and

control of all papers, documents, memorandums,

transcripts, and other objects and materials that

constitute the presidential historical records of

Richard M. Nixon.” Jd. at 1271 (internal quotation

marks omitted). The government advanced precisely

the same theory adopted by the panel here—only to

have the D.C. Circuit squarely reject that approach.

Pet. 18-19. The Nixon court’s reasoning merits close

attention, as it continues to be relevant today.

Among other things, the court explained that “[t}he

rationale for the per se rule is that actual occupation

of property obviates an in-depth factual inquiry to

determine whether one’s economic interests have

been sufficiently damaged as to warrant

compensation.” Nixon, 978 F.2d at 1284. And the

D.C. Circuit emphasized that this Court’s “actual

holding [in] Loretto makes no mention of a distinction

between real and personal property, nor was any

rationale given in the opinion that may justify such a

distinction.” Id.

Underscoring the systematic incentives

governments have to push the limits of takings law,

the court in Rose Acre Farms, Inc. v. United States,

373 F.3d 1177, 1196 (Fed. Cir. 2004), felt compelled to

emphasize that “[t]he trial court correctly rejected the

government’s contention that a ‘per se’ takings

analysis is never applicable when personal property

is at issue.” That case involved a complex set of

health and food-safety testing requirements for

poultry farmers, which included the seizure and

destruction of certain chickens by government agents.

The Federal Circuit noted that when this Court had

been “presented, recently, with the opportunity” to

21

hold that “categorical takings are limited to the

taking of real property,” it specifically declined to do

so in a case involving other personal property (i.e.,

interest on lawyers trust accounts). Jd. at 1196 n.17

(citing Brown v. Legal Found. of Wash., 538 U.S. 216

(2003)). The Federal Circuit drew particular

significance from this Court’s “agree[ment],” in

Brown, “that a per se approach is more consistent”

with prior precedent than an ad hoc standard, and

that “the transfer of the interest fon the trust

accounts] seems more akin to the occupation of a

small amount of rooftop space in Loretto.” Brown,

539 U.S. at 235; see generally Rose Acre Farms, 373

F.3d at 1196 n.17.4

Other courts and judges have reached the same

conclusion. In a case involving a takings challenge to

a law requiring tobacco companies to disclose trade

secrets, Judge Selya explained that “[l]imiting per se

takings analysis to cases involving real property is a

crude boundary with no compelling basis in the law.”

Philip Morris, Inc. v. Reilly, 312 F.3d 24, 51 (1st Cir.

2002) (Selya, J., concurring in the judgment). And, as

noted, Judge Wood looked to Loretto in analyzing the

government’s “physical occupation” of a portion of a

private automobile. Lee, 330 F.3d at 474-475.

R.J. Widen Co. v. United States, 357 F.2d 988 (Ct.

Cl. 1966) (per curiam), ts to similar effect. There, a

* Rose Acre Farms ultimately held that the laws at issue did

not involve a per se taking. 373 F.3d at 1197. But the Federal

Circuit’s extensive discussion of Brown makes clear that the

case should not be read to support the panel's sweeping

approach here. The possibility that Rose Acre Farms might be

read in that manner, cf. id. at 1198, only underscores the need

for this Court’s intervention.

22

property owner contended that the United States had

taken its personal property by constructing a dam

and depriving the property owner of a water supply

necessary to operate its leather-tanning business—

including not only occupation of real property, but

also damage to personal property such as tanning

supplies and hides damaged as a result of lack of

access to water. Jd. at 991. Although the court found

that the specific damage to personal property there

represented consequential damages outside the Fifth

Amendment's protection, it emphasized that

“[uJndoubtedly, the United States could here have

‘taken’ plaintiffs personal property and business, in

which case just compensation would be due.” Jd. at

993.

In Seery v. United States, 161 F. Supp. 395, 399

(Ct. Cl. 1958), an opera star sued the United States

“for just compensation for the taking by the Army of

her real and personal property.” The plaintiff alleged

damage to her residence, home furnishings, and other

personal property when the U.S. Army

commandeered her Austrian “castle-like villa” as an

officers’ rest home during and after World War II. Jd.

at 396. Without any suggestion of applying a

complex regulatory takings analysis, the court

undertook a straightforward assessment of what

personal property the Army had stolen or destroyed,

concluded that “a considerable amount of the

plaintiffs personal property was lost or destroyed

while in the Army’s possession,” and awarded

damages accordingly. Jd. at 399.

By concluding that Loretto’s per se physical

takings rule does not apply to government

appropriation of personal property, and by instead

23

treating a physical taking as a mere “use restriction,”

the panel drew all of these cases into question, and

departed from the great weight of precedent, which

recognizes (or applies) a categorical standard to

claims that the government has physically taken

personal property. This Court’s intervention is

necessary to resolve this conflict of authority.

Il. The Panel’s “Use Restriction” Theory Guts

Protections For Personal Property

As petitioners explain, the panel departed from

long-established precedent when it sought to

immunize the government's seizure of title to a

portion of petitioners’ raisin crop as a mere “use

restriction” (Pet. App. 23a) on personal property. The

panel reasoned that the marketing order applies only

“insofar as [petitioners] voluntarily choose to send

their raisins into the stream of interstate commerce,”

and suggested petitioners could “avoid” the

regulations “by planting different crops, including

other types of raisins, not subject to this Marketing

Order or selling their grapes without drying them

into raisins.” Id. at 25a-26a.

The notion that the government may condition a

business owner’s participation in the free market on

transferring legal title to a fraction of its goods is of

the gravest concern to the Chamber and its members,

and casts a cloud over business owners nationwide.

That theory admits to no principled limitation, and

could justify a range of confiscatory actions, from a

requirement that farmers give up 50% of their

acreage or other property rights as a condition of

selling their crops, to a law that takes physical

possession of half the cars from an automaker's

24

assembly line as a “use restriction” on selling them in

commerce. Even beyond the creation of sharp

conflicts of authority, Pet. 27-33, the dire practical

effects for property owners nationwide of the panel's

“use restriction” theory independently demonstrate

the urgent need for this Court’s review. See Tahoe-

Sierra Pres. Council, Inc. v. Tahoe Regi Planning

Agency, 535 U.S. 302, 320 (2002) (cert. granted on

takings issue “fb]ecause of the importance of the

case”).

5 Nor could petitioners avoid the marketing order by

disposing of their raisins in the intrastate market. See, e.g.,

Gonzales v. Raich, 545 U.S. 1, 17 (2005) (“Our case law firmly

establishes Congress’s power to regulate purely local activities

that are part of an economic ‘class of activities’ that have a

substantial effect on interstate commerce.”).

25

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

KATE COMERFORD TODD JOHN P. ELWoopD

SHELDON GILBERT Counsel of Record

U.S. CHAMBER LITIGATION JEREMY C. MARWELL

CENTER VINSON & ELKINS LLP

1615 H Street, NW 2200 Pennsylvania Ave.,

Washington, DC 20063 NW, Suite 500 West

(202) 463-5337 Washington, DC 20037

(202) 639-6500

jelwood@velaw.com

J. ERIC PARDUE

VINSON & ELKINS LLP

1001 Fannin Street,

Suite 2500

Houston, TX 77002

Counsel for Amicus Curiae the Chamber of Commerce

of the United States of America

OCTOBER 2014