Petition for Writ of Certiorari — Gurney v. United States, 41 Fed. Cl. 2366 (1998) (No. 97-1440)

/ Supreme Court, U.S.

\ | FILED

4

No.97- 'Q'Y1.440 MAR 3~ 1998

OFFICE OF THE CLERK

IN THE

Supreme Court of the Anited States

OCTOBER TERM, 1997

CLIFFORD F. GURNEY, et al.,

Petitioners,

V.

UNITED STATES OF AMERICA,

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Federal Circuit

PETITION FOR WRIT OF CERTIORARI

STEPHEN M. TRUITT

Counsel of Record

CHARLES H. CARPENTER

PEPPER HAMILTON LLP

1300 Nineteenth Street, NW

Washington, DC 20036-1685

(202) 828-1200

JOHN A. WESTBERG

LEWIS M. JOHNSON

WESTBERG & JOHNSON

1300 Nineteenth Street, NW

Washington, DC 20036-1685

(202) 835-9810

PRESS OF BYRON S. ADAMS # WASHINGTON, D.C. # 1-800-347-8208

ae

i

QUESTIONS PRESENTED

I.

Whether, when the consideration exchanged for real and

personal property taken per se is less than just compensation,

the United States is liable to pay the property owners the

constitutional shortfall in a Tucker Act proceeding?

Il.

Whether the executive branch may finally fix the

amount to be paid for property it takes without impermissibly

encroaching on the power of the judicial branch to determine

just compensation?

iil.

Whether the receipt of a substantial benefit less than

just compensation for the appropriation of a citizen’s property

makes that appropriation non-compensable?

IV.

Whether the President’s power to espouse and settle

claims against a foreign government is an appurtenance of all

property acquired in international commerce or located abroad

so that an exercise of this power is not a compensable taking?

il

LIST OF PARTIES

The following persons and entities participated in the

case below and are petitioners here:

Walter Abrahim-Youri

Emanuel Aryeh

Nouriel Aryeh

Ouriel Aryeh

Samuel Aryeh

Mehrdad Azarmi

Jalil Fardanesh

Delta Geotechnical Consultants, Inc.

Clifford F. Gurney

David Laylin

Lockwood Green International, Inc.

Bahman Maalizadeh

Odsiran Data Systems, Inc.

Odsiran Meteorological Systems, Inc.

Robert L. Rutz

Jean Bijan Samimy, M.D.

Lina Z. Samimy, M.D.

Carolyn D. Spatta

University of Northern Colorado

University of Pittsburgh

Richard C. Willson, Jr.

Dara Zargar

Respondent the United States was the only other party

in the Court below.

ill

LIST OF PARENT COMPANIES AND

NON-WHOLLY OWNED SUBSIDIARIES

Philipp Holtzmann USA Inc., a wholly owned

subsidiary of Philipp Holtzmann, is the parent corporation of

petitioner Lockwood Green International, Inc. Lockwood

Green does not have any non-wholly owned subsidiaries.

Odsiran Meteorological Systems, Inc. and Odsiran Data

Systems, Inc. are both wholly owned subsidiaries of Ocean

Data Systems, Inc. Neither has non-wholly owned subsidiaries.

Delta Geotechnical Consultants, Inc. has no parent, and no non-

wholly owned subsidiaries.

OPINIONS BELOW

JURISDICTION

iV

TABLE OF CONTENTS

CONSTITUTIONAL PROVISIONS, TREATIES

STATEMENT OF THE CASE

The Small Claims at the Tribunal ..........

‘The Settlement Agreement ..........00055-

The Commission’s Computation of Awards ..

Te TONE os an hose wens oe abs

bo

CONCLUSION

AND STATUTES INVOLVED ...........

The Decision Below is Inconsistent with this

Court’s Decisions in the Rail Reorganization

Cases and Dames & Moore v. Regan........

The President’s Determination of “Just

Compensation” Usurps a Purely Judicial

Se UNRER ARSE EP BT TSE 1 aun Sa tee SOAR AL sor

The Decision Below Impermissibly Broadens

this Court’s Decision in YMCA ............

The Court of Appeals’ Inclusion of the

Power of Eminent Domain in the “Logically

Antecedent Analysis” Required by Lucas,

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TABLE OF CITED AUTHORITIES

Page

Cases

Brannan vy. City of Tulsa, 932 P.2d 44 (Okla. Ct.

Fe Ee. eee a oe 19

California Housing Securities, Inc. v. United States.

Son we Soe (ree. Ce. 100E) oo ek 28

Chas. T. Main, Int'l, Inc. v. Khuzestan Water & Power

Authority, 651 F.2d 800 (Ist Cir. 1981) 7, 10, 11, 26

Colorado Department of Health v. The Mill, 887 P.2d 993

(Colo. 1994), cert denied, 515 U.S. 1159 (1995) . 23

Commodity Futures Trading Commission v. Schor,

SFE Sid MADCON iy do fee wh ha 17

Consarc Corp. v. Iraqi Ministry, 27 F.3d 695

er Aas Rs Ni Ua a ge eee 3 ee

Corn v. City of Lauderdale Lakes, 95 F.3d 1066 (11th

Cir. 1996), cert denied, 118 S. Ct. 441 (1997) ... 22

Dames & Moore v. Department of Treasury, 544 F. Supp.

PE Gee. CN EMME) ois nb dh as eS 3

Dames & Moore v. Regan, 453 U.S. 654 (1981) ... passim

E-Systems, Inc. v. United States, 2 Ct. Cl. 271, 278 (1983) . 8

Exxon Corp. v. Iran, 17 Iran-U.S. Cl. Trib. Rep. 3 (1987) . 7

vi

Fahey v. Mallonee, 322 U.S. 245 (1947) ............. 28

Gray v. United States, 21 Cl. Ct. 340 (1886) ..... . 25, 26

Hail v. City of Santa Barbara, 833 F.2d 1270 (9th Cir.

1986), cert denied, 485 U.S. 940 (1988) ......... 7

Hohri v. United States, 782 F.2d 227 (D.C. Cir. 1986),

vac sted on other grounds, 482 U.S. 64 (1987) ... 19

Juragua Iron Co. v. United States, 212 U.S. 297 (1909) . 24

Kim v. City of New York, 681 N.E.2d 312 (N.Y.),

Care memes, LISS. Gi Sis? 2 bees Sei cde e ae

Kirby Forest Industrial Inc., v. United States, 467 U.S. |

EE cas OU heh: See A ac uwAd otaeicnnen 8

La Abra Silver Mining Co. v. United States, 175 U.S. 423

CRE lik OSS WER CERO R ee eb aee Lc ok eek 3

Lord Corporation, a claim of less than $250,000 presented

by the United States of America v. Iran Helicopter

Support and Renewal Company, 18 Iran-U.S. Cl.

po RR Of ee oe ae ee eee 2

Loretto v. Teleprompter Manhattan CATV Corp., 458

Ch ae CLE i Ps Nc wee oe Leen ohn eve ues 20

Lucas v. South Carolina Coastal Council, 505 U.S. 1003

CRE 2s Sip wees CECE Uh eae passim

Mitchell v. Harmony, 54 U.S. (13 How.) 115 (1851) .... 24

vii

Monangahela Nav. Co. v. United States, 148 U.S. 312

SOO 30k6 465d axed eecae ls rua ok 15, 16, 17

National Board of Young Mens Christian Ass'ns v. United

et passim

Nollan v. California Coastal Committee, 483 U.S. 825

SeEN Abed baeus eae Ce cea vb ais 27

Penn Central Transportation Co. v. New York City,

GO ns UN RII oS ee gh Stier ts 6, 19

Porter v. United States, 496 F.2d 583, 204 Ct. Cl. 355

(1974), cert. denied, 420 U.S. 1004 (1975) ...... 24

Regional Rail Reorganization Act Cases, 419 U.S. 102

CPE eater eee ee eee ha. passim

a ty ee I RUN gy 24

Ribas y Hijo v. United States, 194 U.S. 315 a. 3 ae 24

Seery v. United States, 127 F. Supp. 601, 130 Ct. Cl. 481

EE Sake Peeves euiy ess Ae Gee yo ERS 24

Stevens v. City of Cannon Beach, 854 P.2d 449

(Or. 1993), cert denied, 510 U.S. 1207 (1994) ... 22

Suitum v. Tahoe Regional Planning Agency, 117 S. Ct.

ENED TE ous he cbdiscica wand ete ue SY 21

Turney v. United States, 115 F. Supp. 457, 126 Ct. Cl.

PEE Case wx niche ag ly eae od toe ws 24

Vill

Wallace v. City of Atlantic City, 608 A.2d 480

ees a aE BOE ipl 3 sig kad ad 96 bere ee 40% 19

Ware v. Hylton, 3 U.S. (3 Dall.) 199 (1796) ........... 27

United States v. Belmont, 303 U.S. 324 (1937) ........ 23

United States v. Caltex, 344 U.S. 149 (1952) .......... 24

United States v. New River Collieries, 262 U.S. 341

ho 4. RRC AS en eta RS TE i ae aa 16

United States v. Sioux Nation of Indians, 448 U.S. 371

to ee Be UR Rt AE oo Pe Bry eae ee oe

United States v. Sperry, 493 U.S. 52 (1989) ........ 25, 26

United States v. Verdugo-Urquidez, 494 U.S. 259 (1990) . 24

Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579

CEP ceva ete Saadeh kane ER Paes 9

Statutes

28 Ss LR Kaa ee CERT ERGed ew hee ESR REG

ee a BE EW hw as ws wai ede wie-6 die 6 bo aieee aes 10

RES EE 0 oielded dwt ho ew sb be eR ee aeons 10

Be as SCE h clk cb de ewals ger orebieniaas 1,2

Be Sas A ES Cea a a Sid TA Rs Oe Sela 15

a

Miscellaneous

Cohen & Ravitch, Economic Sanctions, Domestic

Deprivations, and the Just Compensation

Clause: Enforcing the Fifth Amendment in

the Foreign Affairs Context, 13 Yale J. Int’]

ep SE Aaa ais pu eR hr 9

Declaration of the Government of the Democratic and

Popular Republic of Atgeria Concerning the

Settlement of Claims by the Government of the

United States of America and the Government

of the Islamic Republic of Iran, January 19,

ea ie J Bee §, es ne 14

8 M. Whiteman, Digest of International Law iy Da 3

1 Nichols on Eminent Domain .................. 26, 27

Restatement (Second) of Foreign Relations Law § 211

NEE ON a wae SOU Re eC cine: 3

Testimony of Lloyd Cutler, Esq. in Halliburton Co. v.

Commissioner, No. 9797-86 (U.S. Tax 0) Ran

xX

TABLE OF APPENDIX

Appendix A - Decision of the United States Court

of Appeals for the Federal Circuit,

Ere 4. Cire a ks oo Hh a: Pe ors 5

Appendix B - Decision of the United States Court

of Federal Claims, September 18, 1996 ......

Appendix C - Settlement Agreement in Claims of Less

Than $250,000, Case No. 86 and Case No. B38

Appendix D - Halliburton Corp. v. Commissioner,

No. 9797-86 (U.S. Tax Ct.), Excerpts from

Direct Examination of Lloyd N. Cutler, Esq.,

Wee a oe ee

Appendix E - Affidavit of Lewis M. Johnson ........

Appendix F - Final Decision of the Foreign Claims

Settlement Commission, Jn the Matter of

Co. SE ov tie ewerds haNkwies ba

Appendix G - Final Decision of the Foreign Claims

Settlement Commission, Jn the Matter of

Dara Zargar, Lina Zargar Samimy ..........

Appendix H - Final Decision of the Foreign Claims

Settlement Commission, Jn the Matter of

ESP OSS Ee Rete ot CDT IE

Appendix I - Final Decision of the Foreign Claims

Settlement Commission, Jn the Matter of

University of Northern Colorado ...........

. 30a

xi

Appendix J - Final Decision of the Foreign Claims

Settlement Commission, Jn the Matter of

Jalil Fardanesh

OPINIONS BELOW

The opinion of the Court of Appeals for the Federal

Circuit (App. 1a) is not yet reported. The opinion of the Court

of Federal Claims (App. 18a) is reported at 38 Fed. Cl. 482

(1996).

JURISDICTION

The judgment of the Court of Appeals was entered

December 4, 1997. (App. la.) This Court’s jurisdiction is

invoked under 28 U.S.C. 1254(1).

CONSTITUTIONAL PROVISIONS, TREATIES

AND STATUTES INVOLVED

Amendment V of the United States Constitution

provides “nor shall private property be taken for public use,

without just compensation.” The Tucker Act, 28 U.S.C.

1491(a)(1) provides “[t]he United States Court of Federal

Claims shall have jurisdiction to render judgment upon any

claim against the United States founded . . . upon the

Constitution . . .” The Settlement Agreement for Claims of

Less Than $250,000, Case No. 86 and Case No. B38, made

between the United States and the Islamic Republic of Iran on

May 13, 1990, is reproduced in the Appendix at 30a-40a.

STATEMENT OF THE CASE

Petitioners’ are United States nationals who owned real

and personal property and related claims against the

' Petitioners are individuals, companies, and educational

institutions. Their complaint was filed on their own behalf and as

representative of all claimants receiving awards from the Foreign Claims

Settlement Commission. Their motion for class certification was denied as

moot by the Court of Federal Claims.

2

Government of Iran (“Iran”) arising out of the Iranian

Revolution. The real and personal property was situated in

Iran. The claims against Iran were pending at the Iran-United

States Claims Tribunal in the Hague, The Netherlands. In 1990

the President, acting alone, condemned the petitioners’ property

and conveyed it to Iran “as is and where is.” The President also

fixed compensation for the property at $50,000,000. The

Foreign Claims Settlement Commission determined the value

of the property taken to be far in excess of this amount.

Petitioners filed suit in the Court of Federal Claims under 28

U.S.C. 1491(a)(1) to secure just compensation under the Fifth

Amendment: a “cash award” for the “constitutional shortfall.”

*** * *

The Algiers Declarations (“Declarations”), upheld by

this Court in Dames & Moore v. Regan, 453 U.S. 654 (1981),

resolved the “Iranian Hostage Crisis.” The Declarations moved

adjudication of the claims of U.S. nationals against Iran arising

out of the Iranian Revolution from U.S. courts to a new arbitral

forum (the Iran-United States Claims Tribunal or “Tribunal”’)

and provided funding for awards in favor of United States

claimants. The Declarations also divided claims in two

categories, large and small. Large Claims ($250,000 or more)

were presented at the Tribunal by each Large Claimant itself.

Small Claims, although also referred to the Tribunal, were

presented by the United States as “trustee, guardian and

representative,” on behalf of the Small Claimants.’

? Regional Rail Reorganization Act Cases, 419 U.S. 102, 148

(1974).

* Lord Corporation, a claim of less than $250,000 presented by the

United States of America v. Iran Helicopter Support and Renewal

Company, 18 Iran-U.S. Cl. Trib. Rep. 377, 384 n.3 (1988). The United

(continued...)

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The Small Claims at the Tribunal

The Tribunal commenced proceedings in 1983 on some

2,800 Small Claims filed with it. At the Tribunal, prevailing

Small Claimants* collected payment in full including interest

on awards to the date of payment. Iran has replenished the

security account for the payment of Tribunal awards several

times so that every Tribunal award against Iran has been paid

in full including interest to the time of payment.

The Settlement Agreement

In May 1990, without specific notice to or consent of

the Small Claimants, the United States entered into the

Settlement Agreement (App. 30a) expressly appropriating all

Small Claims by means of espousal.* It then conveyed the

claims to Iran. In addition, the United States conveyed to Iran

all property, real or intangible, that was the subject matter of a

*(...continued)

States considered the relationship between the Small Claimants and the

government to be, “if anything, one of greater trust than that of private

clients to their attorney.” Dames & Moore v. Department of Treasury, 544

F. Supp. 94, 99 (C.D. Cal. 1982) (quoting declaration of James H. Michel,

Deputy Legal Advisor of the Department of State).

* Of the 32 reported small claims decisions, 19 (59% of those

decided) were adjudicated in favor of U.S. claimants. Seventy-one Small

Claimants received awards on agreed terms. Thus, of the Small Claims

resolved at the Tribunal by decision or Tribunal approved settlement, 87%

received an award. The comparable statistic for Large Claimants is 74%.

(App. 46a, 47a. Johnson Aff.).

* “Espousal” is the formal taking up of a citizen’s claim against a

foreign sovereign, see Restatement (Second) of Foreign Relations Law

§ 211 comment (a) (1965), and vests title to the claim in the United States.

See La Abra Silver Mining Co. v. United States, 175 U.S. 423, 459 (1899);

8 M. Whiteman, Digest of International Law 1216-33 (1967).

4

Small Claim or related to it even if the Claim had been

withdrawn, dismissed on jurisdictional grounds, was never

filed, or even if the claimant still owned the property in

question.© The Settlement Agreement also resolved two

outstanding claims of the United States arising from defaulted

loans to Iran. In exchange for claims’ dismissals and

termination and related property transfers Iran agreed to pay the

United States the sum of $105,000,000.

Under the terms of the Settlhement Agreement, the

allocation of the $105,000,000 between the three categories of

claims (Small Claims, No. 86, and B38) was "within the sole

competence and responsibility of the Government of the United

States." (App. 34a (Settlement Agreement § III (iii)).) The

government allocated $50 million for payment of the Small

Claims and the remaining $55 million for payment of two other

claims, which were claims of the United States itself arising

from loans it had made to Iran. The United States thus satisfied

its own claims to the detriment of the Small Claimants.

The Commission’s Computation of Awards

The Small Claims were referred to the Foreign Claims

Settlement Commission (“Commission”) for valuation. The

Commission was directed to decide each claim applying

Tribunal precedent, taking into account defenses available to

Iran. (App. 34a (Settlement Agreement § III (v)).) It made

awards on only about one third of the Small Claims,

* This happened in cases where the claimant alleged an

expropriation by Iran but failed to show it and thus remained the owner of

the property in question up to the date of the Settlement Agreement. See,

e.g., App. 90a (Matter of Fardanesh); App. 60a (Matter of Zargar); App.

76a (Matter of Azarmi).

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5

considerably less than the two-thirds or better success rate of

claimants at the Tribunal.

Where the property taken was a claim against Iran, the

Commission included in its award interest accruing from the

time the claim arose to June 22, 1990, the date the claim was

taken by the Agreement. In cases where the United States took

property related to a claim (real or personal property still

owned by a Small Claimant because the expropriation by Iran

was not established as alleged), the Commission awarded no

interest because no interest had accrued before June 22, 1990.’

Small Claimants whose choses in action were taken did

not receive what the Commission found due, however. The

United States paid these petitioners less than the Commission

awarded because the $50,000,000 set by the President to pay

the claims was insufficient.’ Secondly, the United States

neither computed nor paid any interest for the period after the

’ The reasoning was that the claimant continued to own the

property up to the date of the Settlement Agreement, when it was taken, and

interest was not due, therefore, for this period. See App. 91a (Matter of

Fardanesh). Such prevailing Small Claimants received the full amount of

whai the Commission awarded but no interest for the period from the

Settlement Agreement to the payment, almost five years.

* Petitioners here were awarded in toto principal of $3,335.945.41

and interest up to June 22, 1990 of $2,801,408.28. Only $1,046,971.12 of

this interest found due was paid, leaving a shortfall of $1,754,437.16. or

approximately 29% of the total! awarded by the Commission. The

comparable statistics fc~ the claimants as a whole are principal of

$41,570,936.31, interest through June 22, 1990 of $44,984,859.31, with a

shortfall of $29,457,290.66.

No Petitioner received interest for any period after June 22, 1990.

To the initial underpayment, then, must be added (a) approximately four

years of interest on the entire award, as it came after the taking and (b) an

additional three years of interest on the underpayment.

6

Settlement Agreement to the date of payment, which was

almost five years. This cash shortfall affected all successful

claimants.

Petitioners then sued in the Court of Federal Claims

asserting their real and personal property had been taken per se

and that the payment received was less than just compensation

as defined by this Court. Petitioners sought a partial summary

judgment of the United States’ liability for the constitutional

shortfall between what petitioners received and fair market

value of their houses, orchards, claims, bank accounts, and

businesses at the time of their appropriation and conveyance by

the United States to Iran and interest to the date of payment.

The Decisions Below

The Court of Federal Claims denied petitioners’ motion

and granted the United States’ cross-motion for summary

judgment. The court rejected petitioners’ contention that their

property had been taken per se. Applying its interpretation of

the analysis announced by this Court in Penn Central

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

court determined that the espousal and settlement did not

amount to a compensable taking because, primarily, some

compensation had been made available.

The Court of Appeals for the Federal Circuit recognized

that petitioners’ property had been taken per se, not merely

regulated.’ (App. 8a.) In the court’s view, however, this was

* The court refers to the property affected as “claims” against Iran

without acknowledging that real property, tangible property, as well as

intangibles other than claims, were also taken and conveyed to Iran. See

e.g., App. 84a, 90a (Matter of Fardanesh: taking of two pieces of real

property); App. 63a (Matter of Zargar: taking of apartment building and

(continued...)

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7

not enough to find governmental liability. The court concluded

that the factors identified by the Court of Federal Claims in its

regulatory takings analysis under Penn Central were “relevant”

in determining if there had been a “compensable taking.”””°

(App. 8a.) The court then denied liability finding that because

the President has the power to settle claims against a foreign

sovereign, “it does not strain Lucas [v. South Carolina Coastal

Council, 505 U.S. 1003 (1992)] beyond its intended purpose”

to hold the exercise of that power is not compensable. (App.

13a.)

Secondly, the court denied liability because it found,

without any basis in the record, that petitioners were the

“particular intended beneficiaries” of the Settlement Agreement

within the purview of National Board of Young Mens Christian

Ass’ns v. United States, 395 U.S. 85, 92 (1969), and that they

had “substantially benefitted” from the settlement. (App. 11a.)

The court ignored that the benefit received was “demonstrably

and measurably inferior’'' to what they would have received

had they been allowed to proceed at the Tribunal where their

claims would have been paid in full including interest to the

date of payment. See Exxon Corp. v. Iran, 17 Iran-U.S. Cl.

Trib. Rep. 3, 21-22 (1987) (Brower, J., concurring).

*(...continued)

surrounding land); App. 76a (Matter of Azarmi: taking of right to refund of

down payment and right to delay damages from builder).

'° Ordinarily courts reach “dramatically different results” depending

on whether the taking is viewed as “regulatory” or per se. See Hall v. City

of Santa Barbara, 833 F.2d 1270, 1275 (9th Cir. 1986), cert denied, 485

U.S. 940 (1988).

"' Chas. T. Main Int'l, Inc. v. Khuzestan Water & Power Auth., 651

F.2d 800, 815 (1st Cir. 1981).

8

The concurrence, agreeing with the “analysis and result”

of the majority opinion, found the case to be “significant.” In

particular, the case provided an opportunity to recognize that

“certain ‘per se’ takings . .. which involve a property owner

being ousted from his property by government action . . . do not

automatically result under the fifth amendment in

compensation to the ousted property owner.” (App. 14a.) The

concurrence suggested a “rule of reason analysis” be applied

ad hoc to determine if “governmental interests in espousal are

so weak” as to warrant compensation. Petitioners having made

no such showing, the taking was therefore “non-compensable.”

The court did not discuss this Court’s decisions in

Regional Rail Reorganization Act Cases, 419 U.S. 102 (1974),

and Dames & Moore v. Regan, relied on by petitioners below.

REASONS FOR GRANTING THE WRIT

When the President, acting alone, appropriates a

citizen’s property and conveys it to another, may he also finally

fix the compensation to be paid for that property thereby

foreclosing judicial inquiry as to its actual value? Or must

there be a judicial inquiry and hearing allowing the injured

citizen to prove the “constitutional shortfall” between the

compensation set by the President and the property’s actual fair

market value at the time of transfer plus interest to the date of

payment, i.e., the just compensation this Court has required?”

'2 Interest from the taking date to the time of payment is a part of

just compensation. Regional Rail Reorganization Act Cases, 419 U.S. 102,

149 (1974), Kirby Forest Indus. Inc., v. United States, 467 U.S. 1, 10

(1984); E-Systems, Inc. v. United States, 2 Cl. Ct. 271, 278 (1988).

9

These questions “touch fundamentally upon the manner in

which our republic is to be governed.”

The President may spend the “bargaining chips” of a

citizen’s property to achieve an international agreement, but the

issue of who ultimately pays -- the national or the nation --

presents an intrinsically important question.'* The decision

below is disruptive: if there is no effective damage remedy at

law under the Tucker Act, future claimants of necessity will

seek district court injunctions on due process grounds directly

restraining implementation of agreements by the executive

before they take effect.’ Forcing that option upon claimants

would have two undesirable effects. First, it would undermine

the President’s power to negotiate such resolutions as the

Agreement’s effectiveness would turn on the outcome of such

a challenge. Secondly, the reviewing court, if not the Court of

' Dames & Moore y. Regan, 453 U.S. 654, 659 (1981).

'* See Cohen & Ravitch, Economic Sanctions, Domestic

Deprivations, and the Just Compensation Clause: Enforcing the Fifth

Amendment in the Foreign Affairs Context, 13 Yale J. Int’l] L. 146, 162

(1988), urging that the “principle of just compensation for takings abroad”

be adopted. “. . . [WJhere the United States has either signed a treaty that

‘takes’ title or allows a foreign state to assume title as a part of the

agreement, or has itself acquired use of the contested property, it should be

held liable in the Claims Court for its actions.”

'* Compare Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579

(1952), granting injunctive relief against a governmental seizure in the

absence of a Tucker Act remedy with Dames & Moore v. Regan, 453 U.S.

654 (1981), denying injunctive relief on grounds the Tucker Act damage

remedy was an adequate remedy at law thereby precluding equitable relief.

To the same effect compare the district court decision enjoining the

“conveyance taking” of rail properties because of the unavailability of a

Tucker Act remedy with the Supreme Court’s vacation of that injunction,

having found the Tucker Act remedy available. Regional Rail

Reorganization Act Cases, 419 U.S. 102, 119-20 (1974).

10

Federal Claims in a Tucker Act suit, would have to examine the

adequacy of compensation in a vacuum, in the rushed

atmosphere of a preliminary injunction hearing, and without an

appropriately “developed record.”'®

The rule announced below -- that there is no effective

Tucker Act remedy for takings by Presidential espousals -- will

govern all future executive agreements. And the “sheer

magnitude’’”’ of the Presidential power asserted makes this case

worthy of consideration by this Court. Yet very likely the

decision will never conflict with that of another circuit thereby

invoking this Court’s customary certiorari discretion. This is

an artifact of the peculiar, exclusive appellate jurisdiction of the

Federal Circuit over damage claims against the United States.

28 U.S.C. § 1295(a)(2) & (3). This exclusivity guarantees that

all money claims for takings by espousal will come through the

Court of Appeals for the Federal Circuit and nowhere else."*

Two portions of the opinion stand out for their

dissonance with Fifth Amendment jurisprudence. First, the

court below erroneously indicated that the appropriation of a

citizen’s property is not a compensable taking if the

appropriation, although complete, nonetheless confers through

a compensation mechanism a “substantial” benefit upon the

citizen which is jess than “just compensation.” This view

'* Regional Rail Reorganization Act Cases, 419 U.S. at 146.

" Dames & Moore, 453 U.S. at 688 (quoting with approval Chas.

T. Main Int'l, Inc. v. Khuzestan Water & Power Auth., 651 F. 2d 800, 814

(1st Cir. 1981)).

'* This is not true of most taking claims against the United States

which almost invariably involve real property interests located within the

United States. District courts have jurisdiction over such proceedings under

28 U.S.C. 1358 with concomitant review in all circuit courts.

1]

misconstrues this Court’s decision in National Board of Young

Mens Christian Ass’ns v. United States, 395 U.S. 85 (1969)

(“YMCA”), and would convert the Fifth Amendment to read

“nor shall private property be taken for public use without

substantial compensation.”

Second, the court erroneously found that the President’s

right to espouse is an attribute of all property acquired through

international commerce or located abroad. The court thus

misconstrued Lucas by including in the “logically antecedent”

analysis of the common law attributes of the property in

question the power of eminent domain itself.’ While some

“circularity must be tolerated . . .” in takings analysis,” the

court below surely goes too far, as it would eliminate just

compensation for takings altogether.

The holding is also wrong on the merits -- the President

is bound by the Bill of Rights “even when acting in the sphere

of international relations,”*! and does not have a right to

appropriate private property for public use without just

compensation. These issues -- whether if the citizen has

realized some benefit the appropriation of his property is not

compensable, whether the power of eminent domain itself is a

part of background law to be examined when making a Lucas

determination, and whether the unexercised power of

condemnation is an attribute of all property such that its

exercise is not compensable -- arise in any number of contexts

in the several circuits and in each of the states.

" The power of espousal is a species of the eminent domain power.

See pp. 26-27, infra.

* Lucas, 505 U.S. at 1034 (Kennedy, J., concurring).

*! Main, 651 F.2d at 813, n. 20.

12

The decisions of this Court hold that conveyance

takings of property are compensable and that victims of such

expropriation must be able to obtain a “cash award” for the

“constitutional shortfall” for their injury in a suit under the

Tucker Act, precisely the remedy the decisions below made

unavailable. Accordingly, the case merits review.

1. The Decision Below is Inconsistent with this Court’s

Decisions in the Rail Reorganization Cases and

Dames & Moore v. Regan

The taking and conveyance to Iran of petitioners’

property here are indistinguishable from the “conveyance

taking” in Regional Rail Reorganization Act Cases, 419 U.S.

102 (1974).* There the Rail Act directed the transfer by the

Penn Central (the "debtor") of its railroad property (real and

personal) to a government corporation as part of the

reorganization of the bankrupt northeast rail operations. The

Act also provided compensation consisting of money and

securities in new reorganized entities. The debtor objected on

grounds that the consideration which Congress provided in

exchange for the conveyance of its railroad properties was

inadequate. It was clear, however, that Congress in enacting

the Rail Act intended that no further compensation be provided

to the debtor above what the Act provided. The debtor then

sought to enjoin the transfer on grounds that the Rail Act

deprived it of its property without due process of law.

When this Court was considering the challenge to the

Rail Act, no court had yet passed on the constitutional

adequacy of the congressionally fixed compensation. The

availability of review under the Tucker Act, where that issue

” The court below did not discuss or refer to this case although it

was relied on by petitioners.

ee ee

ee a Gute a

13

could be resolved, saved the scheme from immediate

constitutional scrutiny:

Congress fully expected that this consideration

would provide the minimum compensation

required by the Constitution; it wished to

provide no more. If, however, that hopeful

expectation should not be fulfilled, and the

- consideration exchanged for the rail property

should prove to be less than the constitutional

minimum, the Tucker Act will be available as

the jurisdictional basis for a suit in the Court of

Claims for a cash award to cover any

constitutional shortfall. Id. at 148 (emphasis

added).

This Court applied these principles in Dames & Moore

v. Regan to the President’s power to settle claims against

foreign nations. In deciding that the Tucker Act was available

as a remedy for any unconstitutional taking, this Court

necessarily found that the interests there at issue -- claims

against Iran -- were property capable of being taken in violation

of the Fifth Amendment. Otherwise, this Court would not have

been required to decide the availability of the Tucker Act

remedy: it could simply have stated no such remedy need be

available because claims against a foreign government and

tangible property abroad, are not property, or that the United

States has an inherent right to appropriate these claims without

compensation.

Dames & Moore is this Court’s most recent discussion

of the relation of the takings clause and the foreign relations

power. But the Presidential action considered there was

fundamentally different from the action taken here. In Dames

& Moore, the President had shifted the venue of claims’

14

adjudication to the Tribunal; there was no appropriation and

transfer of claims or real property of U.S. citizens as here.

Nevertheless, a taking of property without just compensation

was threatened by the operation of the Algiers Declarations and

this made “ripe for adjudication the question whether petitioner

will have a remedy at law under the Tucker Act...” 453 U.S.

at 689.

There were several bases argued for contending that

claims might be “taken” by the Declarations without provision

for just compensation. First, there was no assurance that Iran

would replenish the escrow account once it was depleted by

awards. Thus, there was a distinct possibility that claimants

would go to the Tribunal but return with less than just

compensation or no compensation at all. Second, not all

claimants referred to the Tribunal were eligible to have their

claims heard there. Certain contract claims were excluded from

the jurisdiction of the Tribunal by Article II, Section 1 of the

Claims Settlement Declaration. Nevertheless, the Declarations

“terminated” these claims and excluded them from the

jurisdiction of the courts of any nation.”» Such claimants would

have had their claims terminated, yet not be within the

Tribunal’s jurisdiction -- a “Catch-22” leaving them with no

remedy.

Dames & Moore was in this situation. (Transcript of

Oral Argument, Petitioner’s counsel at 6.) Accordingly, it

urged that the Tucker Act damage remedy must be available to

it under Regional Rail Reorganization Act Cases should their

*> Declaration of the Government of the Democratic and Popular

Republic of Algeria Concerning the Settlement of Claims by the

Government of the United States of America and the Government of the

Islamic Republic of Iran, January 19, 1981, art. VII(2), 20 LL.M. 223

(1981).

RCE ee oe cree cru ean a oon i oe

15

claim go to the Tribunal only to be dismissed on jurisdictional

grounds. As Mr. Justice Rehnquist inquired of the Solicitor

General, “. . . what if they go through all these steps and come

back and can show a loss, then do they have a takings claim?”

(Tr. Oral argument, 41). As the provisions of 28 U.S.C. § 1502

exclude claims “arising under or dependent on a treaty” from

the jurisdiction of the Court of Federal Claims that forum

seemed unavailable for a Tucker Act claim. This dilemma was

eased by the Solicitor General’s concession at oral argument

that §1502 did not bar the Tucker Act remedy. This Court

added “We agree.” Id. at 689.

At no point did this Court suggest that Dames &

Moore’s claim was anything but property subject to the

protection of the Fifth Amendment and capable of being taken

by the United States.” Nor was it suggested that the President

had an “easement” of some kind allowing him to take complete

possession of its claim without compensation. Had such been

the case, much of this Court’s opinion would have been

unnecessary.

The impact of the Settlement Agreement is far more

direct than the potential effect of the Declarations on Dames &

Moore’s claims. Here petitioners’ property was appropriated

and conveyed to Iran.

2. The President’s Determination of “Just

Compensation” Usurps a Purely Judicial Function

This Court considered in Monangahela Nav. Co. v.

United States, 148 U.S. 312 (1893), legislation fixing the

* This seems to be the thrust of the opinion below when it suggests

that the right to compensation is not in petitioners’ “bundle of sticks”

because the property involved is not located in the United States.

16

compensation to be paid for property condemned, locks and a

dam on the Monangahela River, at a sum not to exceed

$161,733.13. The law also stated that in proceedings to value

the property, “the franchise of said corporation to collect tolls

shall not be considered.” In holding that the Congressionally

imposed dollar limit could not be given effect, this Court stated

By this legislation Congress seems to have

assumed the right to determine what shall be the

measure of compensation . . . But when the

taking has been ordered, then the question of

compensation is judicial. It does not rest with

... the legislature . . . to say what compensation

shall be paid, or even what shall be the rule of

compensation.” 148 U.S. at 327 (emphasis

added).

An unbroken line of this Court’s decisions has

maintained the vitality of this proscription. United States v.

New River Collieries, Co., 262 U.S. 341 (1923), reiterated “’. . .

ascertainment of compensation is a judicial function, and no

power exists in any department of the government to declare

what compensation shall be or to prescribe any binding rule in

that regard.” Id. at 343-44. More recently, in 1980, this Court

reaffirmed “. . . the ancient principle that the determination of

the measure of just compensation for a taking of private

property ‘is a judicial and not a legislative question.’” United

States v. Sioux Nation of Indians, 448 U.S. 371, 417 n. 30

(1980).

What the Congress acting together with the President is

forbidden to do cannot be accomplished by the President acting

on his own authority. Yet that is the result of the decision

below. The President has taken property and assumed to

himself the wholly “judicial function” of determining the

)

ag SEPT PGA, EPS at eet cdney oe VL ee

17

amount of “just compensation.” In finding that the President

had provided an adequate alternative to either continued

enjoyment of the property or just compensation, the Federal

Circuit endorsed this procedure. This stands in contradiction

to Monangahela and its progeny.

The encroachment by the President on the function of

another coequal department, the judicial branch, is neither

minor nor inconsequential. It is thorough and complete: there

is essentially no role for the judiciary under the decision below,

no matter what compensation is set. Under the analysis of

Commodity Futures Trading Comm'n v. Schor, 478 U.S. 833,

850 (1986) this is an “aggrandizement” of Presidential power

“at the expense of a coordinate branch.”

Permitting the judiciary to exercise its exclusive power

to determine just compensation will not inhibit the President’s

exercise of his foreign affairs power. Judicial review will only

mean that the public, not individuals, bear the costs of our

foreign policy goals. In fact President Carter was specifically

advised by his counsel before entering the Algiers Declarations

that Rail Reorganization Act Cases required a constitutionally

adequate compensation for the claimants who were diverted

from U.S. district courts to the Tribunal. See App. 41a-45a

(Testimony of Lloyd Cutler, Esq. in Halliburton Corp. v.

Commissioner, No. 9797-86 (U.S. Tax Ct.)).

This Court should grant certiorari and clarify, for

benefit of the court below and the President, that

determinations of just compensation for a taking by the United

18

States are judicial functions, notwithstanding the fact that the

appropriation is undertaken to advance foreign policy goals.**

3. The Decision Below Impermissibly Broadens this

Court’s Decision in YMCA

This Court should grant certiorari in order to clarify

that the decision in YMCA was limited to emergencies where

immediate government action was necessary to protect

substantial private interests, and to clarify to the Federal Circuit

and all other courts that receipt of some benefit less than just

compensation does not, of itself, convert an otherwise

compensable taking into a permitted encroachment.

The court below reasoned that because petitioners

received a “substantial” benefit from the espousal and

settlement, there had been no compensable taking. Not only

does this confuse the distinct taking and compensation

analyses, it is a serious misapplication of the authority relied

upon below -- this Court’s holding in YMCA.

YMCA arose from a civil disturbance in the Panama

Canal Zone. YMCA, 395 U.S. at 86. In the course of the

disturbance, a building owned by the YMCA was damaged.

The YMCA sued, claiming that its building was damaged as

the direct result of the U.S. Army’s having taken up positions

first in front of the building, and later inside the building. The

Court rejected this claim, finding that the damage to the

building was caused by the rioters, and not by the United

States. Id. at 89. In addition, however, the Court considered

whether the United States was liable under the Fifth

*° The exercise of this judicial function is all the more important

where, as here, the taking occurs in peacetime and in the absence of an

international emergency or other overarching foreign policy concern.

ee

19

Amendment for the Army’s temporary occupation of the

building. The Court found that it was not, for two reasons:

first, the YMCA had abandoned the building during the

disturbance, and therefore was not deprived of its use by the

Army’s occupation. Jd. at 89-90. Second, the Court found that

the YMCA had stipulated that the Army had occupied the

building for the primary purpose of protecting the building.

The Court indicated that

where, as here, the private party is the particular

intended beneficiary of the governmental

activity, ‘fairness and justice’ do not require

that losses which may result from that activity

may also “be borne by the public as a whole,”

even though the activity may also be intended

incidentally to benefit the public. Were it

otherwise, governmental bodies would be liable

under the Just Compensation Clause to property

owners every time policemen break down the

doors of buildings to foil burglars thought to be

inside. Id. at 92 (citations omitted).

This rule has been applied sparingly in the ensuing 30

years, perhaps because it has been consistently understood to

stand for a proposition that does not often arise: that when the

government occupies property to protect it, no compensable

taking has occurred. See Penn Central, 438 U.S. at 128 (1978);

Hohri v. United States, 782 F.2d 227, 243 n.36 (D.C. Cir.

1986), vacated on other grounds, 482 U.S. 64 (1987). Indeed,

reported applications. of the YMCA rule have involved the

situation hypothesized in YMCA: damage to private property

due to law enforcement activity. See, e.g., Brannan v. City of

Tulsa, 932 P.2d 44 (Okla. Ct. App. 1996); Wallace v. City of

Atlantic City, 608 A.2d 480, 482-83 (N.J. Super. Law 1992).

20

The Federal Circuit cited YMCA but did not apply its

holding.” The court did not base its decision on the motives of

the United States. Nor was there any indication that the court

considered that the President acted from necessity. Indeed,

there was no record evidence as to what moved the President to

espouse and settle the small claims: the United States did not

present any factual basis whatever for a conclusion that the

espousal and settlement was motivated to benefit the petitioners

in particular.”’

By changing the inquiry from the government’s need to

act in an emergency to the hypothesized beneficial effects of

the government’s actions, the Federal Circuit’s decision in this

case stretches YMCA beyond recognition -- and, if the new

interpretation is followed in other courts, will have a profound

impact on takings jurisprudence. The YMCA tule,

unambiguously based on the government’s duty to act in an

emergency for the benefit of particular citizens, is replaced with

a rule which amounts to a complete fusion of the “taking” and

“compensation” parts of the inquiry. Under the Federal

Circuit’s holding, a state would be free, for example, to

* The court below also ignored this Court’s discussion of YUCA

in Loretto v. Teleprompter Manhattan Teleprompter CATV Corp.: where

this Court distinguished physical invasion cases, such as YMCA, from

permanent occupation cases, such as Loretto: 458 U.S. 419, 432 (1982).

Here it is beyond dispute that petitioners property was permanently

espoused -- that the government’s action cannot be considered a “physical

invasion short of permanent appropriation.”

” The undisputed facts showed that before espousal, petitioners had

the right, under Tribunal precedent, to be paid interest on their claims from

the date of the taking by Iran through the date of payment. It is also

undisputed that after the espousal and settlement, petitioners received

substantially less interest than they would have if their claims had been

decided at the Tribunal. Thus whatever “benefit” petitioners received was

less than what was taken from them.

21

appropriate farmland to build a highway without compensation,

provided it could show that the highway would allow the

farmer better access to markets. A municipal body would be

free to restrict all use of a landowner’s real property and

provide as compensation transferable development rights worth

half the value lost to the reai property. This interpretation

“render[s] much of [the Court’s] regulatory takings

jurisprudence a nullity,”, when applied to a per se taking.

Suitum v. Tahoe Regional Planning Agency, 117 S. Ct. 1659,

1672 (1997) (Scalia, J. concurring) Taken to its logical

conclusion -- in fact, as applied here -- the Federal Circuit’s

new rule is that the Constitution merely requires “substantial”

compensation, not “just” compensation. Neither the language

of the Fifth Amendment, nor any precedent of this Court,

supports this interpretation.

4. The Court of Appeals’ Inclusion of the Power of

Eminent Domain in the “Logically Antecedent

Analysis” Required by Lucas, Nullifies that Decision

In Lucas, this Court considered whether state

restrictions on beachfront development constituted a taking

under the Fifth and Fourteenth Amendments. The Court

concluded that the property lost all economic value as a result

of the restrictions, but could not determine whether a

compensable taking had occurred. The Court held that a taking

would not have occurred if the state had the power, under the

common law, to impose the same restrictions without making

just compensation:

Where the State seeks to sustain regulation that

deprives land of all economically beneficial use,

we think it may resist compensation only if the

logically antecedent inquiry into the nature of

the owner’s estate shows that the prescribed use

22

interests were not part of his title to begin with.

Lucas, 505 U.S. at 1027.

The Federal Circuit has misapplied the Court’s decision

in Lucas to this case in two independent ways. First, the court

below incorrectly conducted the “logically antecedent inquiry”

by including the eminent domain power (espousal) as part of

the “estate” that petitioners had in their overseas property. If

this approach were correct there could never be a taking since

all property (domestic and foreign) is subject to being

condemned for the public good. Second, the court erroneously

held that “the prescribed use interests” -- in this case continued

possession of any interest in the seized property -- was not part

of petitioners’ “title to begin with.” Taken together, these

interpretations are remarkable distortions of Lucas, and, have

obvious, far-reaching consequences. The court below would

grant the President “plenary power to settle claims, even as

against foreign governmental entities,” the very power this

Court refused to sanction in Dames & Moore. Dames &

Moore, 453 U.S. at 688.

Since Lucas, courts have understood that the “logically

antecedent inquiry” requires analysis of the property under the

law that creates that property. See, e.g., Corn v. City of

Lauderdale Lakes, 95 F.3d 1066, 1075 (11th Cir. 1996), cert

denied, 118 S. Ct. 441 (1997); Consarc Corp. v. Iraqi Ministry,

27 F.3d 695, 701 & n.5 (D.C. Cir. 1994) (noting that while

federal definition of property was applicable in determining

propriety of administrative action, state definition would be

applicable to takings claim); Stevens v. City of Cannon Beach,

854 P.2d 449, 453-57 (Or. 1993), cert denied, 510 U.S. 1207

(1994) (regulation preventing enclosure of beach property

where Oregon law recognized public right of access). This is

because, as the Court noted,

cca a cam acca ats omc

23

[aJny limitation so severe cannot be merely

legislated or decreed (without compensation),

but must inhere in the title itself, in the

restrictions that background principles of the

State’s law of property and nuisance already

place upon land ownership. A law or decree

with such an effect must, in other words, do no

more than duplicate the result that could have

been achieved in the courts . . . Lucas, 505 U.S.

at 1029.

Neither the Federal Circuit nor the government has

identified a court with the power to transfer complete

ownership of petitioners’ property without compensation.

While there has been some confusion as to whether the

“common law” to be applied in this inquiry includes statutes,

see, e.g., Kim v. City of New York, 681 N.E.2d 312, 315 (N.Y.),

cert denied, 118 S. Ct. 50 (1997) (analyzing divergent views),

as well as whether this inquiry is truly “antecedent,” or whether

it folds into the “reasonable investment-backed expectations”

prong of a Penn Central analysis, see, e.g., Colorado Dept. of

Health v. The Mill, 887 P.2d 993, 1002-03 (Colo. 1994), cert

denied, 515 U.S. 1159 (1995), there has never been a

Suggestion that a court should not look at the law of the state or

nation where the property exists.

Here petitioners’ rights derived from a variety of

different laws.” Petitioner Gurney, for example, had a right

* This case raises the subsidiary question whether the Just

Compensation clause applies to property located abroad, an issue this Court

has not finally resolved, although it has implied and the lower courts have

found that the Fifth Amendment obligation of just compensation applies to

the taking by the United States of property owned by a citizen but located

outside the United States. United States v. Belmont, 301 U.S. 324, 332

(continued...)

24

under Iranian employment law to receive a termination

payment after his twelve-year job at the Iranian embassy in

Washington, D.C. ended. (App. 5la-52a.) Petitioner

University of Northern Colorado had a contractual right to be

paid tuition (App. 80a-82a), under Colorado law. Petitioners

Zargar and Samimy owned real property in Iran. (App. 55a-

56a.) Under the holding of Lucas, as it has been almost

universally applied, the Federal Circuit was required to

determine that the President’s right to take their property

without compensation was an attribute of Iranian contract law,

Colorado contract law, and Iranian property law, respectively.

The government did not assert, and the Federal Circuit did not

determine, that the President’s rights arise under the law

underlying the claimants’ property. Instead, the circuit found

that the president’s foreign policy power to espouse claims --

a Presidential power asserted and acquiesced in by Congress,

4(._ continued)

(1937) (dicta); Mitchell v. Harmony, 54 U.S. (13 How.) 115 (1851) (dicta);

Porter v. United States, 496 F.2d 583, 591, 204 Ct. Cl. 355 (1974), cert.

denied, 420 U.S. 1004 (1975); Seery v. United States, 127 F. Supp. 601,

603, 130 Ct. Cl. 481 (1955); Turney v. United States, 115 F. Supp. 457,

464, 126 Cl. Ct. 202 (1953); see Reid v. Covert, 354 U.S. 1, 9 (1957) (citing

Mitchell and Turney with approval). That the extraterritoriality of the

property is not of paramount consideration can also be implied from this

Court’s decisions in YMCA, United States v. Caltex, 344 U.S. 149 (1952),

Juragua lion Co. v. United States, 212 U.S. 297 (1909), and Ribas y Hijo

v. United States, 194 U.S. 315 (1904). In each case, the claimant’s property

was taken outside the United States -- and in each, the Court denied

compensation on a basis other than the simple and undisputed fact that the

property was located outside the United States. More recently, in United

States v. Verdugo-Urquidez, 494 U.S. 259 (1990), the Court distinguished

the applicability of the Fourth Amendment -- which is not available to

foreign citizens on foreign soil -- with that of the more broadly phrased Fifth

Amendment. /d. at 264-66. The Federal Circuit did not address this

question although an unavoidable implication of its holding here is that the

Just Compensation clause does not apply to property located abroad whether

acquired by will, gift or investment.

25

see Dames & Moore, 453 U.S. at 688 -- satisfied the

requirements of Lucas.

By including in the applicable common law to be

examined the power to condemn or espouse, the Federal Circuit

has critically undermined Lucas. The analysis assures there can

never be a taking because in every case of property ownership

there will always be the possibility of condemnation which,

under the analysis below, renders the taking a “non-

compensable taking.”

As for the second error -- whether a right to continued

possession of any interest inhered in petitioners’ title to their

property, the Federal Circuit did not cite to any decision from

this Court which even remotely supports the proposition that

the President has the power to appropriate a citizens property

free of any obligation of compensation. Nor could it.2°

* See Gray v. United States, 21 Ct. Cl. 340, 392-93 (1886), holding

that a claims settlement by the United States was a taking. Petitioners did not

argue below, and are not asserting here, that Gray is binding in this case.

However, Gray is either a correct statement of the law or it is not. If it is not

a correct statement of the law, then either (a) it was incorrect when made or

(b) the principles articulated in Gray have somehow changed. That the

former is not the case is indicated by Congress’ payment of claims. Indeed,

the court below distinguished Gray, determining that Fifth Amendment

jurisprudence had “evolved” over the last 100 years. It did not, however,

point to any cases in which the principles enunciated in Gray have been

abandoned or modified by this Court.

The few times the Court has had similar questions before it, it has

declined to interpret the Fifth Amendment contrary to Gray. As noted

above, in Dames & Moore, the Court considered whether the transfer of

claims was a taking. If the court below is correct that under an evolved Fifth

Amendment, claims against a foreign sovereign may be taken without just

compensation, the Court could have summarily answered this question in the

negative. In United States v. Sperry Corp., 493 U.S. 52 (1989), the Court

(continued...)

26

“[NJeither the President nor Congress may exercise their

powers so as to contravene the protections of the Bill of Rights,

even when acting in the sphere of international relations.”

Main, 651 F.2d at 813, n. 20. The President’s power to espouse

claims is not merely an analogue to the power of eminent

domain -- it is the same power and has the same purpose:

The right of sovereigns to dispose of the effects

of individuals in order to make peace, is often a

disputed point, nor can they exercise this right

over the property of subjects in any manner

other than as sovereigns. The property of

subjects is so far under the eminent control of

the State, that the State or the sovereign who

represents it, can use that property, or destroy it,

or alienate it, not only in the case of extreme

necessity, which sometimes allow individuals

the liberty of infringing upon the property of

others, but on all occasions, where the public

good is concerned, to which the original

framers of society intended that private interests

should give way. But when that is the case, it is

to be observed, the State is bound to repair the

losses of individuals, at the public expense, in

9(__.continued)

considered whether the imposition of a fee on Tribunal awards was a

compensable taking. The Court concluded that it was not, and specifically

distinguished Gray, noting that the United States had not canceled altogether

Sperry’s claims. Jd. at 59 n.6. In Sperry, the Court also explicitly noted that

Sperry was not asserting the claim advanced by petitioners here -- that the

government’s action had led to a gross recovery less than would have

otherwise been obtained. /d. at 59-60. Again, petitioners are not contending

that the Court has adopted the rule in Gray -- it is clear, however, that this

Court has not subscribed to an evolution of the Fifth Amendment that

overrules Gray.

ee aA R NR re TT ETI Sane

27

aid of which the sufferers have contributed their

due portion. 1 Nichols on Eminent Domain

§ 1.2[2] (quoting Grotius, De Jure Belli et

Pacis, Lib. Ill, C.20, Sec. 7 (1625)).*°

Yet the court below did not simply conclude that the

President has the power to take property without

compensation.*' It found -- without citation to any authority

whatsoever -- that the potential exercise of the power is an

incorporeal hereditament burdening any and all property

acquired through international commerce.** The decision of the

Federal Circuit is striking in one more respect: not only did the

court hold that the President has the power to appropriate

*° See also Ware v. Hylton, 3 U.S. (3 Dall.) 199, 283 (1796)

(Opinion of Cushing, J.) (reinstatement of previously canceled debts to

foreign subjects could be considered proper exercise of eminent domain).

The relationship between the power to espouse and the obligation to

compensate was recognized in that case as well:

[t}hat Congress had the power to sacrifice the rights and

interests of private citizens to secure the Safety or

prosperity of the public, I have no doubt; but . . . ample

compensation ought to be made to all . . . who have been

injured by the treaty for the benefit of the public. This

principle is recognized by the constitution... Jd. at 245

(Opinion of Chase, J.).

*' In any event, even if he possessed this power, the potential that

this power might be exercised had not ripened into a property right at the

time petitioners acquired their property. It was -- at very most -- a mere

“unilateral claim of entitlement,” Nollan v. California Coastal Comm., 483

U.S. 825, 833 n.2 (1987), not an enforceable property interest.

* Petitioners University of Northern Colorado and Gurney, for

example, acquired their rights against Iran as the result of transactions with

Iran conducted in the United States. See App. 80a-82a (Matter of University

of Northern Colorado); App. 49a-50a (Matter of Gurney).

28

without just compensation, it found that this proposition is such

a common place that each and every petitioner can be charged

with knowledge of it, without any evidentiary showing at all,

despite the explicit, contrary language of the 1955 Treaty of

Amity between the United States and Iran.*’ This is exactly the

kind of abuse the Court sought to prevent when it explained

that only rules derived from an “objectively reasonable

application” of pre-existing law can be said to inhere in a

property owner’s title. Lucas, 505 U.S. at 1032 n.18.

The lower court’s extraordinary holding has

implications far beyond this case. First, there is the question of

what is the proper source for determining whether, under

Lucas, a sovereign’s right to appropriate or condemn property

is to be considered in the “logically antecedent” analysis under

Lucas. Second, does the President have the power to

appropriate private property without just compensation, simply

because the property was acquired in international commerce.

The Treaty of Amity provided that

Property of nationals and companies of either High Contracting

Party, including interests in property, shall receive the most

constant protection and security within the territories of the other

High Contracting party, in no case less than that provided for by

international law. Such property shall not be taken without the

prompt payment of just compensation. 8 U.S.T. 899, T.LA.S. No.

3853. art. IV(2).

Petitioners were therefore operating in a fundamentally different

environment from the plaintiffs in California Housing Securities, Inc. v.

United States, 959 F.2d 955, 959 (Fed. Cir. 1992), cited by the concurrence

below. App. 15a. Those plaintiffs were involved in banking, “‘one of the

longest regulated and most closely supervised of public callings,” id. at 958

(quoting Fahey v. Mallonee, 332 U.S. 245, 250 (1947), and could therefore

not claim a taking when the government exercised its regulatory authority

to place their savings and loan association in receivership.

29

Finally, is this Presidential power an incorporeal hereditament

-- 4 present property interest -- of all property?

The Court should grant certiorari to resolve these

questions.

CONCLUSION

For the foregoing reasons, the writ of certiorari should

be granted.

Dated: March 3, 1998

Respectfully submitted,

STEPHEN M. TRUITT

Counsel of Record

PEPPER HAMILTON LLP

1300 Nineteenth Street, N.W.

Washington, D.C. 20036

(202) 828-1230

JOHN A. WESTBERG

LEWIS M. JOHNSON

WESTBERG & JOHNSON

1300 Nineteenth Street, N.W.

Washington, D.C. 20036

(202) 835-9810

Counsel for Petitioner