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

No. 14-275

In the Supreme Court of the Anited States

MARVIN D. HORNE, ET AL., PETITIONERS

v.

UNITED STATES DEPARTMENT OF AGRICULTURE

ON 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 JOHN P. ELWOOD

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

Attorneys for Amicus Curiae

TABLE OF CONTENTS

Page

i ee Il

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rr citeedniubiianieiiteesenhioneaeni 3

BE cnicuticcnetnesesensennednnietsimnannunisaneenminsninddagtenaensiaia 5

I. Diluting The Per Se Physical Takings

Doctrine Wiil Have Serious Negative

Effects On Property Rights Nationwide........... 5

A. The Per Se Physical Takings Rule Is

An Important Bulwark For Private

II icintiniceeiiienienniciontencininenipadennen 6

B. The Panel's Exclusion Of Personal

Property From Categorical Protection

Affects Private Property Rights In A

Broad Range Of Contexts ....................... 14

C. The Weight Of Well-Reasoned

Authority Rejects A Fact-Intensive

Balancing Test For Physical Takings

COE ORIN FOGIIEIOI ccccccccnccsccccceccssecesesss 20

D. The Marketing Order Cannot Be

Defended By Strained Analogy To

Direct Market Regulation....................... 25

II. The Panel's “Use Restriction” Theory Guts

Protections For Personal Property ................. 26

errerarTTTT a xsceindnehsthteteseitieeiniiaeetiiiieietiadilininias titania 32

(I)

II

TABLE OF AUTHORITIES

Cases: Page(s)

A&D Auto Sales, Inc. v. United States,

748 F.3d 1142 (Fed. Cir. 2014).......................... 29

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

EE Cen onan 16

Andrus v. Allard,

a es Se EE cnrectecnscuecsenscccnensenresinsestectinent 26

Armstrong v. United States,

SE NE GT nitiririccnsnniinnceinngtenianamenineneniied 30

Biotechnology Indus. Org. v. District of Columbia,

496 F.3d 1362 (Fed. Cir. 2007).....................0000 20

Brown v. Legal Found. of Wash.,

ee TE ntcricintitiicnsinenecnmeniadiee 22, 26

City of Oakland v. Oakland Raiders,

646 P.2d 835 (Cal. 1962) ............0.0...0...000000 15, 19

Department of Agriculture & Consumer Services v.

Mid-Florida Growers, Inc.,

§ % | £ % SaaS 24

Dolan v. City of Tigard,

I passim

E. Enters. v. Apfel,

I nce 6, 7,8

Gonzales v. Raich,

I einen 28

Hodel v. Irving,

I i tl 26

Innovair Aviation, Ltd. v. United States,

8 RE ER Tees: eee 18, 19

Ill

Cases—Continued: Page(s)

Kooniz v. St. Johns River Water Mgmt. Dist.,

SR EEE OL 1, 26

Lee v. City of Chicago,

330 F.3d 456 (7th Cir. 2003) ................0...... 18, 23

Liggett & Myers Tobacco Co. v. United States,

LESSEE SERS Ce aoa 29

Loretto v. Teleprompter Manhattan CATV Corp.,

a CE iicidittcninnicnsncecncnenieniueiion passim

Lucas v. S.C. Coastal Council,

LS Sennen 10, 11

Maritrans Inc. v. United States,

342 F.3d 1344 (Fed. Cir. 2003).......................... 11

Milwaukee & Suburban Transport Corp. v.

Milwaukee County,

263 N.W.2d 503 (Wis. 1978)........................ 17, 19

Nixon v. United States,

978 F.2d 1269 (D.C. Cir. 1992) ............. 10, 19, 21

Nollan v. Cal. Coastal Comm'n,

UL ES ee passim

Omnia Commercial Co. v. United States,

RARER Ea TEE OC EE 29

Palazzolo v. Rhode Island,

I I ii al iaaeeeniamii 7,8

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

ne Se a neniniel 6, 19

Pennsylvania Coal Co. v. Mahon,

ESL ee ee ae 7

Philip Morris, Inc. v. Reilly,

ge | 1. fs 3 22

IV

Cases—Continued: Page(s)

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

357 F.2d 988 (Ct. Cl. 1966) ................ccccc cc cec eens 23

Rose Acre Farms, Inc. v. United States,

373 F.3d 1177 (Fed. Cir. 2004).................... 21, 22

Seery v. United States,

161 F. Supp. 395 (Ct. Cl. 1958)................... 23, 24

Starr Int Co. v. United States,

I sill 24

Store Safe Redlands Assocs. v. United States,

5 eee 8

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

Planning Agency,

ee MII ccnccccnccccensessucscosecsecosen 7, 10, 13

Turney v. United States,

115 F. Supp. 457 (Ct. Cl. 1953)...............0...0..... 30

United States v. General Motors Corp.,

EE 5

United States v. New River Collieries Co..,

RE Ae ee 29

United States v. Pewee Coal Co.,

EE 10

Wallace v. Hudson-Duncan & Co.,

98 F.2d 985 (9th Cir. 1938) .......000. 0... ee eee 27

Williamson Cnty. Reg'l Planning Comm'n v.

Hamilton Bank of Johnson City,

Se Ge Bee GD tenn eterscevecsecsccccccecccesccccnsccnscens 7

Yee v. City of Escondido,

I 7

V

Statutes and Regulations:

Oe BT iinciicnnbacnestneiniepnmmaiibhebbianiiadaeensnil 27

7 U.S.C. § GO8c(G)(EB).............ccceceeee. Semcunainsithiceataieieasadiaal 6

FE HITT cilinictadscactesntibiubdniniahniddanbeaumiossumnied 27

Oe i a enieaetunnenel 6

Or ITT nn cincecunsensnnetigncncenaiesetomedpnenne 6

Fe I vivecncccccscscceosmsctececcesoncernioconssness 6

FF Oe ED ccitncnasccnseinncssncenndnonnmniusasenenndsconnesn 6

Fe incase siincnpuicintecindinnsaicnabiaiababamesunitis 6

se I vcenccccscenssesccosstceseaveisnanss 31

ee IED crtucseinssininussesiensnscmmininnienenons 6

D.C. Code §§ 28-455 1-28-4555..............cccccsccseseccsees 19

Miscellaneous:

Ackerman, Bruce A., Private Property

Ee GD GG OD deccsstenccccecescscgnsccdcseese 9

Ball, Carlos A. & Laurie Reynolds, Exactions and

Burden Distribution in Takings Law, 47 Wm.

& Mary L. Rev. 1513 (2006).................ccccccecseees 30

Berger, Steven N., Access for CATV Meets the

Takings Clause: The Per Se Takings Rule of

Loretto v. Teleprompter Manhattan CATV

Corp., 25 Ariz. L. Rey, 689 (1983).................... 11

Byrne, J. Peter, Ten Arguments for the Abolition

of the Regulatory Takings Doctrine,

RB EE re 9

Durden, Stephen, Unprincipled Principles:

The Takings Clause Exemplar,

3 Ala. C.R. & C.L. L. Rev. 25 (2013)................. 10

Vi

Miscellaneous—Continued: Page(s)

Epstein, Richard A., The Seven Deadly Sins of

Takings Law: The Dissents in Lucas v. South

Carolina Coastal Council,

26 Loy. L.A. L. Rev. 955 (1993)....................ceeeee s)

Fee, John E., The Takings Clause as a

Comparative Right,

76 S. Call. Le. Bev. 1008 CROOB) q.......cccccccccccccccesscs. 9

Fenster, Mark, Takings Formalism and

Regulatory Formulas: Exactions and the

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

icicle eli tala ical lintel meatal passim

Gray, Charles, Keeping the Home Team at Home,

le | | RE ene 16

Haar, Charles M., Land-Use Planning (3d ed.

Haar, Charles M. & Michael Allan Wolf, Euclid

Lives: The Survival of Progressive

Jurisprudence,

115 Harv. L. Rev. 2158 (2002) ..................sceeeeee 10

Humbach, John A., A Unifying Theory for the

Just-Compensation Cases: Takings, Regulation

and Public Use,

34 Rutgers L. Rev. 243 (1982)......................000- 10

Mead II, Leon F., 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)............. 15, 16

VII

Miscellaneous—Continued: Page(s)

Poirier, Marc R., The Virtue of Vagueness in

Takings Doctrine,

24 Cardozo L. Rev. 93 (2002) ....................008. 8,11

Rose, Carol M., Crystals and Mud in Property

Law, 40 Stan. L. Rev. 577 (1988)...................... 12

Rose, Carol M., Mahon Reconstructed:

Why the Takings Issue Is Still a Muddle,

og fe SS SO Uf, eae 9

Rose-Ackerman, Susan, Against Ad Hocery: A

Comment on Michelman,

88 Colum. L. Rev. 1697 (1988).................... 12,13

Rubenfeld, Jed, Usings,

eee 10

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

ee ides Se ee icainicncsicsitahennineddnneenteneniinicaties 10

Wiseman, Patrick, When the End Justifies the

Means: Understanding Takings Jurisprudence

in a Legal System with Integrity,

63 St. John’s L. Rev. 433 (1988).......................- 12

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 the interests of more than three million

businesses and professional organizations of every

size, in every industry sector, and from every region

of the country. More than 96 percent of the

Chamber's 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 busi-

ness community, including cases defending constitu-

tional protections for private property rights against

government infringement. The Chamber filed a brief

amicus curiae at the certiorari stage in this case, a

brief amicus curiae supporting the same property

owners when this case was last before this Court as

Horne v. Department of Agriculture, No. 12-123

(leading to a unanimous reversal of the Ninth

Circuit’s prior judgment), and in Koontz v. St. Johns

River Water Management District, No. 11-1447

(which resulted in a property-rights-protective ruling

that supports petitioners in this case).

- —

' 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 any

monetary contribution to its preparation and submission. The

parties have consented to this filing.

(1)

2

On remand from this Court’s prior reversal, the

Ninth Circuit again sharply departed from this

Court’s longstanding takings jurisprudence, adopting

a dangerous new test that guts property rights pro-

tections. The decision is of grave practical concern to

the Chamber and its members, which have a sub-

stantial interest in ensuring that property owners re-

tain an adequate, efficient, and prompt remedy

against government takings of real and personal

property. Historically, the property rights of Cham-

ber members have been subject to infringement by

state and federal governments in a wide range of cir-

cumstances, including through laws, like those at

issue here, which impose monetary fines or penalties

as a proxy for outright physical appropriation of pri-

vate property.

The Ninth Circuit held here that a federal law

requiring petitioners to transfer physically to the

government a substantial portion of their annual

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

to the value of the raisins that the government

demanded be handed over—was not a categorical

“taking.” Thus, property owners are 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 regula-

tory takings doctrine. Adding insult to injury, the

court below sought to defend its rule by suggesting

that petitioners could avoid the expropriation simply

by abandoning their four-generation family vocation

and instead “choosing” to produce something other

than raisins. The Ninth Circuit’s radical decision

(and the government’s shifting array of novel and

flawed theories proffered to defend it) creates

3

significant doctrinal confusion and_ substantially

weakens Fifth and Fourteenth Amendment nights,

with wide-ranging consequences for business

interests and private property holders nationwide.

The Court should reverse.

SUMMARY OF ARGUMENT

The decision below improperly conflates the cate-

gorical 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 tradi-

tionally reserved for land-use exactions. In particu-

lar, the Ninth Circuit’s holding that Loretto v. Tele-

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

(1982), “applies only to a total, permanent physical

invasion of real property” (Pet. App. 17a (emphases

added))—and thus is inapplicable when the govern-

ment appropriates personal property—represents a

dangerous retreat from a bright-line rule that has

long served as an important bulwark for property

rights, as reflected in this Court’s and lower-court

authority.

The decision threatens private property rights in a

broad range of contexts, and creates dangerous in-

centives 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 predicta-

bility provided by a per se rule for physical takings—

than real property. Case reporters are replete with

examples of the government appropriating personal

4

property, illustrating the diverse forms of interfer-

ence with, and abuse of, property rights that the

decision effectively green-lights.

The decision below also errs by holding 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 re-

framed as a mere “use restriction.” The outright

physical appropriation that occurs under this regula-

tory regime cannot be immunized from constitutional

scrutiny simply by analogizing it to a different (and

hypothetical) law that regulates how and when a pri-

vate owner may dispose of its own raisins in

commerce.

The panel's “use restriction” theory, in particular,

amounts to the unprecedented and indefensible

notion that the government can condition a property

owner’s ability to sell goods on its “agreement” to

hand over a significant fraction of its property to the

government, for the government to dispose of as it

sees fit. That dangerous idea is anathema to bedrock

principles of property rights, admits to no principled

limitation, and is irreconcilable with numerous deci-

sions of this Court and lower state and federal courts.

This Court should reverse the judgment below,

and reaffirm Loretto’s core teaching that a taking oc-

curs whenever the government physically occupies or

appropriates private property. That result is neces-

sary to avert dire effects on private property rights

nationwide and to avoid inviting governments to re-

frame a broad range of unconstitutional appropria-

tions as mere “use restrictions.”

5

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

ignored the weight of well-reasoned decisions from

other 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 _ contin-

gent, theoretical interest in the raisins or enjoyed in-

direct benefits from the regulatory program as a

whole; and (3) whether the regulation effects a cate-

gorical taking is governed by the “nexus and rough

proportionality” balancing test for land-use exactions

under Nollan 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's holding will have wide-

ranging negative practical effects on private property

rights, and by highlighting the ways in which the de-

cision creates doctrinal confusion and harms im-

portant interests that are far better served by the

longs*»nding categorical rule.?

2 Contrary to its prior wepresentations to this Court and

others, the government's brief in opposition for the first time

argues that the raisin marketing order does not formally

transfer “title” from =fraisin producers to the Raisin

Administrative Committee. See Br. in Opp. 6, 17, 23. As

petitioners explain, the argument is unavailing, because

physical appropriation of property implicates the Takings

Clause. E.g., United States v. General Motors Corp., 323 U.S.

373, 378 (1945) (“Governmental action short of acquisition of

6

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 appropriation of petitioners’ rai-

sins under the ad hoc, fact-intensive regulatory tak-

ings standard rather than Loretto’s per se rule—

undermines important interests of predictability and

clarity reflected in this Court’s development of cate-

gorical rules for particular classes of takings.

1. Regulatory takings have long been governed by

the “essentially ad hoc, factual inquir[y]” set forth in

Penn Central Transportation Co. v. New York City,

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

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

sign and practical effect, that approach requires

title or occupancy has been held, if its effects are so complete as

to deprive the owner of all or most of his interest in the subject

matter, to amount to a taking.”); Pet. Br. 23-25.

Here, the marketing order requires producers to give up

physical possession of “reserve” raisins, requires handlers to

store reserve raisins “for the account” of the Raisin

Administrative Committee, requires raisins to be delivered to

the committee at its sole direction, 7 C.F.R. §§ 989.66(a), (b)(2),

(b)(4), and vests the Committee with typical rights and

obligations of ownership, see id. §§ 989.66(f), (g), 989.67(b)-(e)

(Committee pays costs of storage, may “in its discretion” use

raisins as “security for loans, and can sell or “gift” raisins as it

sees fic); accord Pet. FP r. 23-25. Retention of a vague “equitable”

claim to such proceeds (if any) remaining after the government

has disposed of reserve raisins in this fashion. 7 U.S.C.

§ 608c(6)(E), is a far cry from rights long protected by the

Takings Clause. See Loretto, 458 U.S. at 435 (“Property rights

in a physical thing have been described as the rights to possess,

use and dispose of it.” (quotation marks omitted)).

7

courts to undertake “complex factual assessments of

the purposes and economic effects of government ac-

tions,” 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 fof

property}” to a categorical takings rule “would trans-

form government regulation into a luxury few gov-

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

regulations in the modern era. Tahoe-Sierra Pres.

Council, Inc. v. Tahoe Regi 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.

Regi Planning Comm'n v. 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 comp’ex and fact-intensive approach for reg-

ulatory takings analysis imposes significant costs on

property owners and litigants, burdening the exercise

of private property rights. “[A] party challenging

governmental action as an unconstitutional taking

bears a substantial burden.” 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 land-

8

owner,” interference with “reasonable investment-

backed expectations,” and “the character of the gov-

ernment action,” Palazzolo, 533 U.S. at 617), the reg-

ulatory takings doctrine necessarily deprives prop-

erty 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 dis-

senting 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 regu-

latory taking cases that is seen by many as so fact

specific that general predictability is made very diffi-

cult.”). Governments, too, suffer costs and uncer-

tainty from unpredictable legal rules. See E. Enters.,

524 U.S. at 542 (Kennedy, J.) (“boundarfies] for ap-

plication of the regulatory takings rule providfe] some

necessary predictability for governmental entities”).

Similar concerns have been raised about the bal-

ancing test from Nollan and Dolan applicable to land-

use exactions, 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 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

9

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 pro-

posed new use for the property, the regulation upon

which the government relies in requiring the chal-

lenged 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 (panel decision analyzing purpose

and performance of raisin marketing order for means-

ends analysis).

In part for these reasons, ad hoc regulatory tak-

ings 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 Regula-

tory 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. Rose, Mahon Reconstructed: Why the

Takings Issue Is Still a Muddle, 57 S. Cal. L. Rev.

561, 562 (1984) (“{C]Jourts continue to reach ad hoc

determinations rather than principled resolutions.”);

Charles M. Haar & Michael Allan Wolf, Euclid Lives:

10

The Survival of Progressive Jurisprudence, 115 Harv.

L. Rev. 2158, 2170 (2002) (“hopelessly confused”);

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

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

ently incompatible results”); Stephen Durden, Un-

principled 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 mud-

dle (or muddled), confused, incomprehensible, stand-

ardless, and unprincipled” (internal quotation marks

omitted); collecting authorities); John A. Humbach, A

Unifying Theory for the Just-Compensation Cases:

Takings, Regulation and Public Use, 34 Rutgers L.

Rev. 243, 244 (1982) (“farrago of fumblings’”).

2. In contrast to these fact-intensive, ad hoc

inquiries, this Court has carved out several bright-

line, categorical rules in areas where clarity is

particularly important and “in-depth factual 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 occu-

pation, 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);

accord Jed Rubenfeld, Usings, 102 Yale L.J. 1077,

1101 (1993) (“Loretto stands on the idea that

particular incidents of property ownership have a

11

special status that compels compensation for their

abridgment.”).3

Commentators have lauded these per se rules for

providing predictability and certainty for property

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). Loretto’s per

se rule has the virtue of making “it * * * easy to tell

when the rule has been violated—a boundary is trav-

ersed.” Poirer, 24 Cardozo L. Rev. at 108. As a re-

sult, property owners face a less onerous burden in

defending and litigating their rights, while govern-

ments gain predictability and certainty in the con-

duct of public affairs, and are subject to the full fi-

nancial 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 approach in this case. A per se rule allows

property owners to make investments based on con-

crete expectations about the risk of government inter-

ference. See Patrick Wiseman, When the End Justi-

fies the Means: Understanding Takings Jurispru-

3 Courts have applied both the Loretto and Lucas rules to

personal property. See, e.g., pp. 18-24, infra; Maritrans Inc. v.

United States, 342 F.3d 1344, 1352-1353 (Fed. Cir. 2003)

(rejecting government's argument that Lucas was inapplicable

to takings of “tangible property.” such as tank barges).

12

dence 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, “[t]akings law should

be predictable * * * so that private individuals confi-

dently can commit resources to capital projects.”

Susan Rose-Ackerman, Against Ad Hocery: A Com-

ment 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 pro-

tect property owners’ investment-backed expecta-

tions. 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 de-

pend 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.

13

“By offering clear declarations of the extent of

property owners’ constitutional rights and limiting

the discretion of judges and administrative decision

makers, clear rules ensure fair and value-neutral

coherence, regularity, and predictability across dis-

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

619. Conversely, 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 unin-

surable risk.” Rose-Ackerman, 88 Colum. L. Rev. at

1700. From the perspective of optimizing the alloca-

tion of valuable resources, “{t]o the extent that inves-

tors are risk averse, the very incoherence of the doc-

trine produces inefficient choices.” Ibid.

The per se rule also creates salutary incentives for

governments, discouraging gamesmanship or efforts

to reframe traditional “takings” to exploit doctrinal

loopholes or ambiguities. Under a per se rule, it does

not matter what type of property is appropriated,

whether the property owner retains some kind of

limited interest, or what the government's rationale

for appropriating private property might be; 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 adopt regulations that physically

appropriate property without any categorical

obligation to compensate the owner, so long as the

regulations satisfy—at most—the “nexus and rough

14

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 government’s anticipated cost

of a taking, essentially discounting the rate of

compensation by the possibility that the factfinder

will conclude the government owes no compensation.

That uncertainty not only affects the government’s

choices, but also changes how property owners inter-

act 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 in-

determinacy and uncertainty, stabilizing and pro-

tecting property rights within the present distribu-

tion 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 pri-

vate property rights by replacing the certainty of a

categorical rule with the fact-intensive, ad hoc, and

fundamentally indeterminate balancing test of Nollan

and Dolan.

B. The Panel’s Exclusion Of Personal

Property From Categorical Protection

Affects Private Property Rights In A

Broad Range Of Contexts

The practical consequences of the decision below

sweep far beyond the Depression-era agricultural

regulations at issue in this case to affect property

15

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

creates incentives for strategic behavior, inviting

governments to restructure regulations that effect de

facto physical appropriation of personal property in a

manner that avoids paying just compensation. These

cases 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 Foot-

ball 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.”5 Jd. at 837. The

‘ Although the government seeks to limit the decision to the

facts of this case (Br. in Opp. 21-22), the explicit language of the

court’s opinion sweeps far more broadly. See Pet. App. 20a (“we

see no reason to extend Loretto to govern controversies involving

personal property”); accord id. at 17a.

5 For a more detailed history, see 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). Maryland similarly authorized the

City of Baltimore to use eminent domain to prevent the NFL's

Colts franchise from moving to Indianapolis. See Charles Gray.

16

California Supreme Court held that the Raiders’

property interests were condemnable under

California law, bringing into sharp focus the im-

portance of constitutional takings protection.

The California Supreme Court never questioned

that assuming possession and ownership of the team

would constitute a taking. But under the Ninth

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

premise 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

ruling here, it is not hard to imagine how Oakland

could have altered its strategy to fit the panel’s loop-

hole. For instance, the City might have demanded a

part 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 possession of a certain percentage

of the tickets offered for the government’s “account,”

again in the guise of market regulation. Under the

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

1331 & n.14 (1986).

6 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 5, 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. Nat7

Football League, 130 S. Ct. 2201, 2216 (2010) (noting “special

characteristics’ of National Football League relevant to

antitrust analysis).

17

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 (or gave away) the tickets.

In Milwaukee & Suburban Transport Corp. v.

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

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

balancing-test framework, potentially exempting it-

self 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 possi-

bility of a contingent future benefit to the bus com-

pany. 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 prop-

18

erty for a purpose other than eminent domain. In Lee

v. City of Chicago, police impounded an innocent by-

stander’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 discov-

ered 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 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.” Jd. at

474 (Wood, J., concurring). Notably, she cited Loretto

in concluding that “[aJny 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 WNollan and

Dolan, or the ad hoc balancing test for regulatory tak-

ings.

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 plaintiffs private property,

19

analogizing to Loretto instead of Penn Central be-

cause “fhlere we have the total destruction of the

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

F.2d 1269 (discussed below and at Pet. Br. 34-35), the

Innovair 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 appropriated by the Government.” 72

Fed. Cl. at 423. Innovair ultimately held that the

plaintiff had suffered a compensable taking when the

government physically occupied its personal property.

The panel’s analysis would replace that clear-cut ap-

proach 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 incen-

tives to appropriate personal property in a wide

range of substantive areas, and to disguise the true

costs of those choices. One recent Washington, D.C.

law prohibited patented drugs from being sold in the

District for an “excessive” price, requiring drug man-

ufacturers 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 stat-

ute represented a clear attempt to disguise the true

fiscal cost of providing a public benefit—shifting the

cost of subsidized drugs from taxpayers (who other-

wise would have to use public funds) to a drug's in-

20

ventors 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

*** diminisfh] 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 companies physically to provide low-

income residents with patented drugs free of charge.

If this Court upholds the conclusion that Loretto’s

per se rule is wholly inapplicable to personal prop-

erty, public officials nationwide will shift their strat-

egy away from forthright use of eminent domain and

toward regulatory regimes that achieve a similar

practical outcome on the cheap. The decision here

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 Weight Of Well-Reasoned Authority

Rejects A Fact-Intensive Balancing Test

For Physical Takings Of Personal

Property

Well-reasoned authority from numerous other

courts rejects the panel’s novel conclusion that

Loretto is categorically inapplicable to “controversies

involving personal property” or where property

owners retain some contingent benefit from govern-

ment expropriation, and the panel’s attempt to re-

characterize the physical appropriation here as a

“use” restriction subject to the balancing test from

Nollan and Dolan. Pet. App. 20a; Pet. Br. 31-36.

Amicus supplements those arguments and identifies

21

other authorities that counsel rejection of the panel's

novel and sweeping approach.

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 Presi-

dential Records and Materials Preservation Act of

1974 effectively “authoriz[ing] the Administrator of

General Services to retain complete possession and

control of all papers, documents, memorandums,

transcripts, and other objects and materials that con-

stitute 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.

Br. 34-35. 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 de-

termine 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 persona! property, nor was any rationale

given in the opinion that may justify such a distinc-

tion.” Id. ~-

Underscoring the systematic incentives govern-

ments 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 analy-

22

sis 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 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 signifi-

cance 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 [on 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.17.7

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

7 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.

23

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), is to similar effect. There, a

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 ac-

cess 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

“fuJndoubtedly, 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 comman-

deered her Austrian “castle-like villa” as an officers’

rest home during and after World War II. Id. at 396.

Without any suggestion of applying a complex regula-

tory takings analysis, the court undertook a straight-

forward assessment of what personal property the

Army had stolen or destroyed, concluded that “a con-

siderable amount of the plaintiffs personal property

24

was lost or destroyed while in the Army’s possession,”

and awarded damages accordingly. Jd. at 399.8

This approach is not limited to federal courts.

Department of Agriculture & Consumer Services v.

Mid-Florida Growers, Inc., 521 So. 2d 101, 102 (Fla.

1988), found a compensable taking where Florida had

destroyed healthy citrus trees to guard against a cit-

rus canker affecting other groves. Citing Loretto, the

Florida Supreme Court rejected as irrelevant the

state’s focus on its own “lack of a possessory or pro-

prietary interest in the destroyed property.” Id. at

103. The Mid-Florida court gave no hint that the

straightforward takings claim presented there should

be analyzed under an ad hoc, factual inquiry.

By concluding that Loretto’s per se physical

takings rule does not apply to government appropria-

tion of personal property, and by instead treating a

physica] taking as a mere “use restriction,” the panel

drew all of these cases into question, and departed

from the great weight of precedent, which applies a

categorical standard to claims that the government

has physically taken personal property. This Court

should endorse the majority view and reverse the

contrary holding.

8 See also Starr Jnt7 Co. v. United States, 106 Fed. Cl. 50, 82

(2012) (holding that Nollan and Dolan “apply only in cases

involving land use exactions,” in analyzing claim that federal

government bailout of American International Group, Inc.,

constituted taking of corporate stock).

25

D. The Marketing Order Cannot’ Be

Defended By Strained Analogy To Direct

Market Regulation

In seeking to defend the judgment, the govern-

ment has argued that the raisin marketing order “is

effectively indistinguishable” from a _ hypothetical

alternate scheme in which raisin owners retain own-

ership of their crop, and are free to “dispos[e] of the

raisins in a manner approved by the [Committee]

***” Br. in Opp. 19-20. In essence, the government

invites this Court to analyze the marketing order's

reserve-tonnage scheme as if it were a different law—

that Congress might have established, but did not—

merely “limit[ing] the amount of a crop that a farmer

can sel] * * *.” Jd. at 20.

To begin with, the argument rests on a false

premise. The marketing order does not allow raisin

producers and handlers to “disposfe]” of their own

reserve-tonnage raisins, but rather requires transfer

of physical possession of those raisins, formally des-

ignates them for the Committee’s “account,” and

authorizes the Committee to dispose of the raisins as

it sees fit—including by giving them away. See note

2, supra. The marketing order thus deprives the

owner of virtually every stick in the bundle of

property rights, transferring those rights to the

Committee without compensation. A law that merely

caps the amount of raisins that a particular grower

may sell leaves the “excess” share in the producer’s

possession and control, and does not transform a

producer's fee interest into a vague “equitable” claim

to residual net value. The two regimes are not

26

equivalent in any relevant constitutional or legal

sense.®

More generally, the government cites no authority

for the startling proposition that an unconstitutional

law can be made immune from scrutiny simply be-

cause the government, in a legal brief (and without

record evidence), says its practical effects are similar

to those of a different kind of regulation. For

example, this Court has “repeatedly found takings

where the government, by confiscating financial obli-

gations, achieved a result that could have been ob-

tained by imposing a tax.” Koontz v. St. Johns River

Water Mgmt. Dist., 133 S.Ct. 2586, 2601 (2013)

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

216, 232 (2003)), accord Loretto, 458 U.S. at 440 n.19

(similar).

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

Protections For Personal Property

1. As petitioners explain, the panel ignored the

great weight of established precedent when it sought

to immunize from constitutional challenge the seizure

of a portion of petitioners’ raisin crop as a mere “use

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

* In holding that a regulatory prohibition on the sale of eagle

feathers was not a taking, Andrus v. Allard emphasized that the

regulations “do not compel the surrender of the [property],” and

found it “crucial that [the property owners] retain the rights to

possess and transport their property.” 444 U.S. 51, 65-66

(1979). Neither factor is present here. In any event, three

Justices who joined the majority opinion in Hodel v. Irving, 481

U.S. 704 (1987), concluded that by “finding a taking” on the facts

of that case, Hodel had “effectively limit{ed] Allard to its facts.”

Id. at 719 (Scalia, J., concurring).

27

subject only to the balancing test from Nollan and

Dolan previously applied only to land-use permitting

exactions. 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.” Jd. at 25a-26a.

The notion that the government may condition a

business’s participation in the market on its willing-

ness to transfer a significant percentage of its goods

to the government without compensation is a grave

threat to private property rights. 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 prop-

erty rights as a condition of selling their crops, to a

law that takes physical possession of half the cars

from an automaker’s assembly line as a “use

restriction” on selling them in commerce. The dire

implications of the panel’s “use restriction” theory for

property owners nationwide cannot be overstated.!°

1© The government would doubtless reject the possibility that

petitioners could avoid the marketing order by disposing of their

raisins in the intrastate ‘market. See 7 U.S.C. § 608c(1)

(defining regulatory authority to reach handling of agricultural

products “which directly burdens, obstructs, or affects.

interstate * * * commerce”); 7 C.F.R. § 989.15 (defining covered

raisin “handler{s]” to include “any person who places, ships, or

continues natural condition raisins in the current of commerce

from within the area to any point outside thereof’). Compare

also Wallace v. Hudson-Duncan & Co., 98 F.2d 985, 989 (Sth

Cir. 1938) (rejecting takings challenge to walnut marketing

28

2. In addition to its sweeping practical implica-

tions, the panel's “use restriction” theory lacks any

sound basis in precedent. Most notably, it contra-

venes Loretto’s explicit instruction that “a landlord’s

ability to rent his property may not be conditioned on

his forfeiting the right to compensation for a physical

occupation.” 458 U.S. at 439 n.17. Indeed, the

panel’s holding is difficult to distinguish from obvi-

ously prohibited practices the Court recognized such

a rule would permit, such as “allow[ing] the govern-

ment to require a landlord to devote a substantial

portion of his building to vending and washing

machines, with all profits to be retained by the own-

ers of these services and with no compensation for the

deprivation of space.” Jbid. So too here. Accepting

the Ninth Circuit’s “use restriction” theory would

essentially condition petitioners’ right to dispose of

their personal property on their “agreement” to forfeit

compensation for a physical appropriation of a

portion of that property. Condoning that theory

would open the door to countless other abusive

government tactics that seek to exploit private

property for public use, without compensation. But as

this Court has recognized, “[t]he mght[s] of a property

owner * * * cannot be so easily manipulated.” Jbid.

order on ground that grower could “choos{e] not to comply with

the interstate requirements of the Order, [and] nevertheless

retain all its walnuts intrastate and dispose of them to

intrastate buyers”), with Gonzales v. Raich, 545 U.S. 1, 17

(2005) (“Our case law firmly establishes Congresss power to

regulate purely local activities that are part of an economic

‘class of activities’ that have a substantial effect on interstate

commerce.”).

29

Courts have long enforced the requirement to pay

just compensation without any hint that this core

constitutional obligation could be _ sidestepped

through government semantics. In Omnia

Commercial Co. v. United States, 261 U.S. 502, 511

(1923), this Court confirmed that a steel company

would be entitled “to the just compensation guaran-

teed by the Constitution” where the government had

requisitioned all its steel output. The Court gave no

suggestion that such a takings claim would be de-

feated by the possibility that the steel company could

choose to produce a different product.

Similarly, Liggett & Myers Tobacco Co. v. United

States, 274 U.S. 215, 220 (1927), sustained a takings

claim, and the obligation to pay full compensation,

where the government requisitioned the personal

property of “tobacco products” from a manufacturer.

The government could not avoid compensation simply

by re-characterizing the “compulsory” requisition

order as a mere contractual “offer to purchase.” Ibid.

And United States v. New River Collieries Co., 262

U.S. 341 (1923), upheld a takings claim where the

government “requisitioned *** upwards of 60,000

tons of bituminous coal,” id. at 342. This Court never

suggested that the Takings analysis would involve

anything other than straightforward, market-value

compensation for the personal property that had been

seized. >

The same principle is reflected in lower-court

decisions today. A&D Auto Sales, Inc. v. United

States, 748 F.3d 1142 (Fed. Cir. 2014), sustained the

viability of takings claims based on the federal

government's alleged coercion of General Motors and

Chrysler to cancel franchise agreements with certain

30

local dealerships, in exchange for federal financial

assistance. In affirming the district court’s denial of

the government’s motion to dismiss, the court gave no

suggestion that the government could avoid takings

liability simply by inviting the plaintiff auto dealers

to “avoid” harm by selling other brands of

automobiles. Cf. Pet. App. 25a-26a.

Turney v. United States, 115 F. Supp. 457 (Ct. Cl.

1953), held that a takings claim was actionable where

the Philippines had forbid exportation from that

country of certain U.S. military surplus equipment,

which the United States had previously sold the

plaintiffs at auction. The Court of Claims gave no

suggestion that the plaintiffs’ takings claim would be

defeated by the possibility that they might elect to

sel] something other than military equipment, or sell

their surplus property within the Philippines. Jd. at

463-464.

3. Shielding the marketing order from constitu-

tional scrutiny by re-characterizing it as a “use re-

striction” violates the fundamental principle that the

Takings Clause “bar[s] Government from forcing

some people alone to bear public burdens which, in

all fairness and justice, should be borne by the public

as a whole.” Armstrong v. United States, 364 U.S. 40,

49 (1960); accord Carlos A. Ball & Laurie Reynolds,

Exactio’; and Burden Distribution in Takings Law,

47 Wm. & Mary L. Rev. 1513, 1534 & n.104 (2006)

(Armstrong formulation “endorsed in almost every

important takings opinion of the last thirty years”).

The order challenged here does not merely regulate

the domestic raisin market, but allows the govern-

ment to use raisins to further various national poli-

cies. such as directing raisins to be used by sale or

31

gift to U.S. agencies, school] lunch programs, foreign

governments, charitable organizations—or even

raisin farmers themselves, for export. See 7 C.F.R.

§§ 989.67(b)(2)-(4). The panel opinion effectively

freed the government to pursue those initiatives on

the cheap—without the need to use tax dollars to pay

for the raisins distributed.

Taking physical possession of petitioners’ raisins

as a condition of their participation in the domestic

market places the entire burden of implementing

those government policies on raisin producers and

handlers, rather than the public. The rule is easily

generalizable—by the same logic, the government

might require airlines to “reserve” a certain percent-

age of seats to be provided to government employees

for free or a substantial discount, thus shifting the

cost for government travel from the public to the air-

lines. Condoning the panel's “use restriction” theory

would permit government entities to shift the burden

of a broad variety of government programs from the

public to private property owner. That fundamen-

tally conflicts with the Takings Clause’s core

constitutional guarantee.

32

CONCLUSION

The judgment should be reversed.

Respectfully submitted.

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

Counsel for Amicus Curiae the Chamber of Commerce

of the United States of America

MARCH 2015