Opposition Brief — Rose Acre Farms, Inc. v. United States

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No. 09-342

In the Supreme Court of the Gnited States

ROSE ACRE FARMS, INC., PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

ELENA KAGAN

Solicitor General

Counsel of Record

TONY WEST

Assistant Attorney General

JEANNE E. DAVIDSON

MARK A. MELNICK

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTION PRESENTED

Whether, for purposes of regulatory takings analysis

under the Fifth Amendment, the court of appeals cor-

rectly analyzed the “economic impact” and the “charac-

ter” of regulations promulgated by the United States

Department of Agriculture in 1990 and 1991 to contro!

the spread of Salmonella enteritidis in eggs.

(I)

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

American Sav. & Loan Ass’n v. County of Marin, 653

Pe er: ED kc webvadnoeucoecesssocuwe 13

Armstrong v. United States, 364 U.S. 40 (1960) ....... 22

Buhmann v. State, 201 P.3d 70 (Mont. 2008),

cert. denied, 130 S. Ct. 394 (2009) ................. 18

Concrete Pipe & Prods. of Cal., Inc. v. Construction

Laborers Pension Trust, 508 U.S. 602 (1993) .... 10,21

Connolly v. Pension Benefit Guar. Corp., 475 U.S.

2G: Sana ree pao RMR CE a oy yea rertet SENOS 17, 21

Department of Agric. & Consumer Affairs v. Mid-

Florida Growers, Inc., 521 So. 2d 101 (Fla.),

cert. denied, 488 U.S. 870 (1988) ..............-4.. 14

District Intown Props. Ltd. v. District of Columbia,

198 F.3d 874 (D.C. Cir. 1999), cert. denied,

Boe Be ee ee ee 13

FHA v. Darlington, Inc., 358 U.S. 84 (1958) ........... 21

First English Evangelical Lutheran Church v.

County of L.A., 482 U.S. 304 (1987) ............505. 16

Keystone Bituminous Coal Ass’n v. DeBenedictis,

gtk et, ) Se mei ere Ae 10, 17

(IIT)

Cases—Continued: Page

Lingle v. Chevron U.S.A. Inc., 544 U.S. 528

DEE evita Gs sche esta keke ee Meek aee ese as 5, 18, 19

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

EE oa var aa teed xeen eas ewsieben se’ 10, 14

Machipongo Land & Coal Co. v. Commonwealth,

799 A.2d 751 (Pa.), cert. denied, 537 U.S. 1002

Eh aa bs cee CRO AE RR CROOKS AREER E ADRESS 13

Manz v. Georgia Dep't of Corrs., 653 S.E.2d 740

I scar ayer e ule died secs Seb seee hee 19

Miller v. Schoene, 276 U.S. 272 (1928) .........-...06- 17

Mugler v. Kansas, 123 U.S. 623 (1887) ............... 17

Penn Cent. Transp. Co. v. New York City, 438 U.S.

EE Ws iss d cosacn cee ekkaeel 4, 10, 12, 13, 16

Rose Acre Farms, Inc. v. Madigan, 956 F.2d 670

(7th Cir.), cert. denied, 506 U.S. 820 (1992) ........... 4

Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l

Planning Agency, 535 U.S. 302 (2002) .......... 12,14

Twain Harte Assocs., Ltd. v. County of Tuolumne,

265 Cal. Rptr. 737 (Ct. App. 1990) .............. 12,13

Union Pac. R.R. v. Brotherhood of Locomotive E'ngi-

neers Gen. Comm. of Adjustment, No. 08-604 (Dec.

el beat asso r el vuuae Vide ee eure ee aes 20

Vulcan Materials Co. v. City of Tehuacana, 369 F.3d

EE ED oe ea cre ee ee we wayne 13, 14

Wensmann Realty, Inc. v. City of Eagan, 734 N.W.2d

PPPOE TT COT PET COT eee reir 19

Wisniewski v. United States, 353 U.S. 901 (1957) ... 12,16

Constitution, statutes and regulations: Page

U.S. Const.:

Te re ea he ce gaa ais eee 9

Just Compensation Clause .............00e000s 21.2

Egg Products Inspection Act, Pub. L. No. 91-597,

84 Stat. 1620 (21 U.S.C. 1031 et seq.):

DE RRL Sccvesccunesdueeeveveseees 20

21 U.S.C. 1034(a) (§ 5(a), 84 Stat. 1624) .......... 20

9 C.F.R. (1991):

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rE rer er Ty 3

ES es ocak eC RR AES OES CUED ESE 3

BN LI COU) 3s vob dks ce cee es ccekoeeevendan 11

Miscellaneous:

2. BOS og ar rrr er 11

ee PEED op daccsstccecavewaseenssds 3

Michael E. St. Louis et al., The Emergence of

Grade A Eggs as a Major Source of Salmonella

enteritidis Infections, 259 JAMA 2103 (1988) ..... 23

Jn the Supreme Court of the Anited States

No. 09-342

ROSE ACRE FARMS, INC., PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-49a)

is reported at 559 F.3d 1260. An earlier opinion of the

court of appeals (Pet. App. 50a-90a) is reported at 373

F.3d 1177. The opinion of the Court of Federal Claims

(CFC) (Pet. App. 91a-119a) is unreported. An earlier

opinion of the CFC (Pet. App. 120a-180a) is reported at

55 Fed. Cl. 643.

JURISDICTION

The judgment of the court of appeals was entered on

March 12, 2009. A petition for rehearing was denied on

May 20, 2009. On August 3, 2009, the Chief Justice ex-

tended the time within which to file a petition for a writ

of certiorari to and including September 17, 2009, and

(1)

the petition was filed on that date. The jurisdiction of

this Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

1. Salmonella enteritidis (salmonella) is a bacte-

rium normally found in the gastrointestinal tract of

birds and farm animals. Pet. App. 125a & n.5. When

ingested by humans, salmonella can cause nausea, vom-

iting, abdominal cramps, diarrhea, fever, headache, and

sometimes death. Jd. at 125a n.5; C.A. App. 212-213.’

Approximately 15%-20% of those who have been diag-

nosed with salmonellosis, the disease caused by salmo-

nella, require hospitalization. /d. at 301.

In the late 1980s, the Centers for Disease Control

(CDC) determined that human health problems linked

to salmonella exposure were increasing. Pet. App. 4a.

With respect to transmission involving chicken eggs,

before the 1980s, salmonella had been found only on the

outside of eggs. C.A. App. 280. After an investigation

into a 1986 salmonella outbreak during which 3300 peo-

ple became ill, however, the CDC concluded that salmo-

nella also could be transmitted from hens to the inside

of eggs. Id. at 223, 225-226, 245-249, 279-281, 287-296.

In 1990, the United States Department of Agricul-

ture (USDA) promulgated interim regulations to ad-

dress the danger that salmoneila-contaminated eggs

posed to humans. Pet. App. 4a-5a. Under the interim

regulations, a farm identified as a probable source of

salmonella-contaminated eggs was designated as a

“study flock” and subject to environmental testing. /d.

at 5a (quoting 9 C.F.R. 82.32 (1991)). If one or more

environmental samples tested positive, the farm was

' Allreferences to “C.A. App.” refer to the appendix filed in the court

of appeals in No. 03-5103.

designated as a “test flock” and its eggs could not be

sold in interstate commerce for sale as raw “table eggs,”

though the eggs could still be sold for uses that entailed

pasteurization. /d. at 5a-6a & n.2.

Under the interim regulations, “[s]pecified numbers

of the hens in test flocks were also required to undergo

blood and internal-organ testing. A test flock was desig-

nated an ‘infected flock’ if the organs of one or more

hens tested positive for [salmonella].” Pet. App. 54a

(citations omitted). Eggs from an “infected flock” were

subject to the ban on interstate shipment for use as ta-

ble eggs until either (1) the premises or hens tested neg-

ative for salmonella, or (2) the poultry houses containing

the infected hens were depopulated, cleaned and disin-

fected, and inspected by USDA inspectors. 9 C.F.R.

82.32(c), 82.33(a) (1991); see Pet. App. 54a-55a.

On January 30, 1991, the USDA published its final

salmonella regulations. See 56 Fed. Reg. 3730. The

final rules incorporated the requirements set forth

above. The final rules also made clear that restrictions

on interstate sale could be imposed on a henhouse-by-

henhouse basis, and thus could apply to some but not

other henhouses on a single farm. The final regulations

provided, however, that so long as some henhouses on a

particular farm were subject to the sale restrictions, the

USDA would continue to monitor other houses on the

same farm, including those that had tested negative for

the presence of salmonella. See Pet. App. 55a, 128-129a.

2. In 1990, three separate outbreaks of salmonella

contamination, which sickened approximately 450 people

in three States, were traced back to eggs from hen-

houses on three different farms owned by petitioner in

Indiana. Pet. App. 130a-132a. In response, the USDA

imposed sales restrictions and commenced testing. /d.

at 131a-1338a. The last restrictions were lifted in 1992.

Id. at 8a. Over the 25 months during which houses on

one or more of its farms were subject to USDA restric-

tions, petitioner sold for uses involving pasteurization

approximately 700 million eggs that otherwise could

have been sold as table eggs. /d. at 135a.

3. In December 1990, petitioner filed suit in the

United States District Court for the Southern District

of Indiana, asserting a variety of challenges to the

USDA regulations. C.A. App. 92. The Seventh Circuit

ultimately sustained the regulations, and this Court de-

nied a petition for a writ of certiorari. Rose Acre Farms,

Inc. v. Madigan, 956 F.2d 670, cert. denied, 506 U.S. 820

(1992). As relevant here, the court of appeals rejected

petitioner’s argument that the regulations were invalid

because the USDA had made no provision for compen-

sating persons who suffered pecuniary losses as a result

of the regulatory restrictions, explaining that the CFC

could award relief if either the Constitution or a federal

statute were found to require compensation. /d. at 672-

674.

4. Petitioner filed suit in the CFC, which held that

a taking had occurred and awarded compensation. Pet.

App. 120a-180a. A unanimous panel of the Court of Ap-

peals for the Federal Circuit vacated the CFC’s judg-

ment and remanded for reconsideration under Penn

Central Transportation Co. v. New York City, 438 U.S.

104 (1978) (Penn Central). See Pet. App. 50a-90a. This

Court denied petitioner’s petition for a writ of certiorari

(No. 04-1149), as well as the government’s conditional

cross-petition for a writ of certiorari (No. 04-1311). See

545 U.S. 1104. On remand, the CFC again found that a

taking had occurred and awarded petitioner approxi-

mately $5.4 million in compensation plus approximately

$3.3 million in fees and expenses. Pet. App. 9la-119a.

5. A unanimous panel of the court of appeals re-

versed. Pet. App. la-49a. The court explained that

“[t|]he common touchstone of regulatory takings prece-

dent is ‘to identify regulatory actions that are function-

ally equivalent to the classic taking in which the govern-

ment directly appropriates private property or ousts the

owner from his domain.’” Jd. at 12a (quoting Lingle v.

Chevron U.S.A. Inc., 544 U.S. 528, 539 (2005)). The

court of appeals further explained that, outside certain

narrow contexts not at issue here, “a court conducts a

factual inquiry based on the well-known Penn Central

factors to evaluate whether the government’s regulation

rose to the level of a taking,” including “(1) the economic

impact of the action on the claimant, (2) the effects of

the governmental action on the reasonable investment-

backed expectations of the claimant, and (3) the charac-

ter of the governmental action.” /d. at 12a-13a (citing

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

a. The court of appeals began with “[t]he economic

impact of the government’s regulatory action,” Pet. App.

13a, and determined that that factor favored the govern-

ment, zd. at 3la. The court concluded that the relevant

property had declined in value only by approximately

10% as a result of the USDA’s regulatory program, and

it observed that petitioner had “point[ed] to no case in

which a court has found a diminution in value of 10% as

being severe or as favoring a taking.” /bid.

i. The court of appeals concluded that the CFC and

petitioner’s expert witness had erred in defining “the

parcel of allegedly taken property.” Pet. App. 22a; see

id. at 22a-25a & n.5. Reiterating a conclusion from its

initial opinion, the court of appeals stated that “the rele-

vant parcel” consisted of all of the eggs produced from

“the three farms as a whole rather than each individual

hen house” during the relevant period. /d. at 15a. Al-

though “the interstate and intrastate transport restric-

tions were applied ultimately to individual houses,” the

court noted in its earlier opinion that both “the trace-

backs that resulted in the ‘study flock’ designation” and

the subsequent environmental testing that resulted in

“the identification of the restricted ‘test houses’[] were

* * * directed to each farm as a whole,” and that, under

the regulations, “as long as any one house on any farm

was designated as an ‘infected house,’ all other houses

on that farm were required to undergo testing for pur-

poses of monitoring.” /d. at 73a. The court of appeals

determined that “because the regulations at issue ap-

plied to each farm as a whole, their economic impact

cannot be measured by considering the restricted

houses alone.” /bid.

ii. The court of appeals also determined that, in as-

sessing the impact of the USDA’s regulations, the CFC

erred in “looking only at the percentage decrease in

profits” that petitioner experienced during the relevant

period. Pet. App. 16a. The court explained that “the

vast majority of [regulatory] takings jurisprudence ex-

amines, under Penn Central’s economic impact prong,

not lost: profits but the lost value of the taken property.”

[bid.; see id. at 16a-17a. The court of appeals also iden-

tified a variety of problems with “sole reliance” on a

lost-profits measure, including the CFC’s failure to iden-

tify “some benchmark standard” against which to com-

pare the amount of lost profits, id. at 17a-18a, as well as

the difficulty (which the CFC had not acknowledged) “in

comparing any given diminution of return calculation

with another diminution in return calculation,” id. at

18a; see id. at 18a-21a (providing examples of how exclu-

sive use of a diminution in profits approach can generate

“incongruent results”). The court of appeals acknow!l-

edged that “unfortunate dicta” in its previous opinion

had “suggested that the diminution in return might be

the more appropriate metric,” but it concluded that

those statements “stemmed from a framing of the issues

less clear than presently before the court.” /d. at 22a.

The court of appeals observed that the “property” in

question was “now clearly defined as the diverted eggs

themselves,” which were “a discrete asset, the market

value of which is readily ascertainable.” /d. at 30a. Un-

der the circumstances, the court of appeals stated that

“it was clear error to place sole reliance on the diminu-

tion in return metric.” Jbid. The court emphasized,

however, that it was not holding “that, in other circum-

stances, a factfinder may never rely solely on diminution

in return to assess the economic impact of [a] regula-

tion,” and the court stated that it “need not decide

whether the [CFC] should have looked only at diminu-

tion in value without consideration of diminution of re-

turn.” Jd. at 30a n.7.

b. Reiterating another conclusion from its previous

decision, the court of appeals concluded that Penn Cen-

tral’s “reasonable investment-backed expectations” fac-

tor favored petitioner. Pet. App. 3la-32a. In its previ-

ous opinion, the court of appeals acknowledged that “the

poultry industry in general is highly regulated” and that

there are “long-standing regulations aimed at prevent-

ing the spread of communicable diseases in birds and

poultry.” Jd. at 74a. The court determined, however,

that the salmonella “regulations were more than an ex-

tension of comparable regulations to a new disease,”

because “[t]hey were grounded in new scientific under-

standing (i.e., that salmonella could be transmitted from

hen to egg) and were unprecedented in their reliance on

environmental and hen testing.” Jd. at 74a-75a.

c. Finally, the court of appeals re-examined Penn

Central’s “character” factor and concluded that it fa-

vored the government. Pet. App. 32a-45a. The court

examined this Court’s intervening decision in Lingle,

and concluded that, under Lingle, it could “no longer ask

whether the means chosen by government advance the

ends or whether the regulation chosen is effective in

curing the alleged ill.” /d. at 36a. The court of appeals

also stated that, under Lingle, it “must consider ‘the

actual burden imposed on property rights, or how that

burden is allocated,’” as well as “the magnitude or char-

acter of the burden a particular regulation imposes upon

private property rights.” Jd. at 37a. The court of ap-

peals observed that “the [salmonella] regulations did not

single out [petitioner],” but rather “broadly anplied to

almost any egg producer in the United States.” /d. at

38a. The court further noted that “[t]he [salmonella]

regulations as enacted targeted no single egg producer

unless [salmonella]-infected eggs were traced back to a

particular farm and that farm tested positive.” /bid.

The court of appeals also concluded that Lingle had

not modified “a substantial body of case law” that had

considered the “public health and safety aspect of” a

regulation in assessing a regulatory takings claim. Pet.

App. 39a, 42a-43a (citing cases). The court reviewed the

Nation’s long history of food regulations, see id. at 40a-

42a, and stated that restrictions on “uses of personal

property * * * directed at the protection of public

health and safety” are “the type of regulation in which

the private interest has traditionally been most confined

and governments are given the greatest leeway to act

without the need to compensate those affected by their

actions.” Jd. at 44a (citing cases). The court determined

that “the government’s act [of] protecting the public

health by identifying diseased eggs and forcing their

owner to remove them from the table market[]

weigh|ed] strongly against finding a taking here,” and it

rejected petitioner’s assertion that, after Lingle, it could

“only consider the public health aspect of the [salmo-

nella) regulations in a diminished and optional role.” /d.

at 43a-44a.

ARGUMENT

Petitioner’s challenges to the court of appeals’ unani-

mous decision lack merit and do not warrant further

review. Petitioner is in the ongoing business of intro-

ducing billions of eggs annually into the Nation’s food

supply. It is uncontroverted that eggs originating from

henhouses at three different farms operated by peti-

tioner were connected to salmonella outbreaks that sick-

-ened 450 people in three States. In response, the USDA

imposed temporary measures that prevented petitioner

from seiiing eggs produced from the contaminated facili-

ties in the interstate market for raw table eggs until it

adequately remedied the contamination, while leaving

petitioner free to continue selling eggs from non-con-

taminated facilities and to sell eggs from the contami-

nated facilities for uses that involved pasteurization.

The court of appeals correctly held that petitioner is not

entitled to compensation under the Fifth Amendment as

a result of those temporary measures designed to pro-

tect public health. The court of appeals’ decision also

does not conflict with any decision of another court of

appeals or state court of Jast resort. Further review is

thus unwarranted.

1. Petitioner first contends (Pet. 14-21) that the

court of appeals erred in determining that the relevant

“denominator” for purposes of assessing Penn Central’s

economic impact prong was the full quantity of eggs pro-

duced by the three farms that contained the contami-

nated henhouses rather than simply those eggs that

originated from the contaminated henhouses them-

selves. Pet. 19-20. The contention does not merit fur-

ther review.

a. The court of appeals’ decision is correct. ““Tak-

ing’ jurisprudence does not divide a single parcel into

discrete segments and attempt to determine whether

rights in a particular segment have been entirely abro-

gated.” Penn Central Transp. Co. v. New York City, 438

U.S. 104, 180 (1978). Rather, in “compar[ing] the value

that has been taken from the property with the value

that remains in the property,” this Court has recognized

that “the aggregate must be viewed in its entirety.”

Keystone Bituminous Coal Ass’n v. DeBenedictis, 480

U.S. 470, 497 (1987) (Keystone Bituminous) (citation

omitted). “To the extent that any portion of property is

taken, that portion is always taken in its entirety; the

relevant question, however, is whether the property

taken is all, or only a portion of, the parcel in question.”

Concrete Pipe & Prods. of Cal., Inc. v. Construction La-

borers Pension Trust, 508 U.S. 602, 644 (1993) (Concrete

Pipe).

Petitioner errs in asserting that the court of appeals

applied the sort of “extreme * * * and unsupportable

* * * view of the relevant” parcel that this Court criti-

cized in Lucas v. South Carolina Coastal Council, 505

U.S. 1003, 1016 n.7 (1992). See Pet. 20 (citation omit-

ted). The analysis that the Court disapproved in Lucas

was one that focused on the “total value of the taking

claimant’s other holdings in the vicinity.” 505 U.S. at

1017 n.7. But the court of appeals’ holding that the rele-

vant parcel included all of the eggs produced on the

three farms during the restriction period was not based

simply on unity of ownership or the mere physical prox-

imity of other portions of the farms to the infected

houses. Rather, the court’s delineation of the parcels

was based on the fact that, under the salmonella regula-

tions, the farm as a whole was treated as the relevant

unit of regulation because of the potential for salmonella

to spread throughout the farm. See Pet. App. 73a (ex-

plaining that although the “restrictions were applied

ultimately to individual houses, * * * the tracehbacks

that resulted in the ‘study flock’ designation(s] * * *

were, in accordance with the interim and final regula-

tions, directed to each farm as a whole” and that, under

the regulations, “as long as any one house on any farm

was designated as an ‘infected house,’ all other houses

on the farm were required to undergo testing for pur-

poses of monitoring”) (quoting 9 C.F.R. 82.38 (1992)).

The court’s approach is further supported by the fact

that, during the period that the three farms were sub-

ject to regulatory restrictions, individual henhouses

moved in and out of “infected” status depending on

whether salmonella contamination had spread from one

house to another and whether petitioner had depopu-

lated and disinfected a particular henhouse. C.A. App.

144-181.”

* Petitioner’s assertion (at 20) that the court of appeals should have

looked only to those eggs produced from the affected henhouses also

overlooks the impact of the USDA’s regulatory efforts on petitioner’s

broader business operations. By minimizing the risk that contaminated

eggs will cause harm to human health, those efforts could reasonably be

expected to increase consumer confidence and thus support the national

market for table eggs. See 55 Fed. Reg. 5577 (1990) (USDA forecasts

that, “{ijf not controlled, [salmonella] * * * will cause adverse eco-

nomic impact on the table egg industry by * * * decreasing demand

for eggs due to lack of consumer confidence that eggs are a safe food.”).

Petitioner is a major participant in that national market, Pet. App. 82a,

and, even during the restriction period, petitioner’s three farms af-

fected by the salmonella restrictions continued to sell a majority of the

eggs they produced on the raw table egg market. See C.A. App. 240,

242-244. In assessing the economic impact of the salmonella regula-

tions, a court should not ignore the fact that regulatory measures rea-

sonably designed to reduce the risk of salmonella contamination and

consequent adverse health effects on consumers could logically be

expected to increase the marketability of the table eggs that petitioner

continued to sell, both from the three particular farms at issue here and

from other farms. But cf. Pet. App. 31a (declining to consider any “off-

setting benefits” of the USDA's regulations because the government

“points to no economic data in the record” to quantify the precise extent

of those benefits).

Petitioner also errs in suggesting (Pet. 20) that the

court of appeals’ decision makes “the Fifth Amendment

mean{] something different depending on whether a

business is large or small.” The court of appeals’ analy-

sis did not turn on the size of petitioner’s overall busi-

ness but rather on the degree to which particular units

or parcels of property had been impaired. And peti-

tioner’s further suggestion that it has been treated un-

fairly because (it asserts) the result of the taking analy-

sis might have been different had it “owned only the

restricted houses,” 2b7d., is simply a general attack on

the principle that, “in regulatory takings cases,” a court

“must focus on ‘the parcel as a whole.’” Tahoe-Sierra

Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535

U.S. 302, 331 (2002) (Tahoe-Sierra) (quoting Penn Cen-

tral, 438 U.S. at 130-131).

b. Petitioner asserts that lower courts “are divided

over how to” define the relevant parcel for purposes of

Penn Central’s economic impact factor and have

“reached inconsistent results” with respect to that ques-

tion. Pet. 15-16. Petitioner does not directly assert,

however, that the court of appeals’ decision in this case

conflicts with the decision of another court of appeals or

a state court of last resort, nor does it describe the facts

or holdings of any of the cases that it cites (see Pet. 16-

18).° As petitioner acknowledges, “takings questions are

* Petitioner asserts (at 18) that “disagreement persists * * * with-

in the Federal Circuit.” But none of the judges on the unanimous panel

of the court of appeals perceived any such conflict, and the court of

appeals denied petitioner’s petition for rehearing en banc without re-

corded dissent. In any event, an intracircuit conflict would not warrant

this Court’s review. See Wisniewski v. United States, 353 U.S. 901, 902

(1957) (per curiam).

Petitioner also suggests that the court of appeals’ decision conflicts

with a decision from a state intermediate appellate court. See Pet. 18

(citing Twain Harte Assocs., Ltd. v. County of Tuolumne, 265 Cal.

‘essentially ad hoc, factual inquiries.’” Pet. 19 (quoting

Penn Central, 438 U.S. at 124). It is thus impossible for

petitioner to establish a conflict that would warrant this

Court’s review simply by citing a series of decisions

without providing any description of their particular

facts and circumstances.

In any event, there is no conflict with any of the deci-

sions that petitioner associates with what it character-

izes as the “[rJeasonable {e]xpectation [s]chool” or the

“(gjlovernment [cJonduct [s]chool.” Pet. 17 (emphasis

deleted); see Pet. 17-18. In District Intown Properties

Ltd. v. District of Columbia, 198 F.3d 874, 880 (1999),

cert. denied, 531 U.S. 812 (2000), the D.C. Circuit deter-

mined that nine contiguous lots should be treated as one

parcel, even though the lots had been subdivided. In

American Savings & Loan Ass’n v. County of Marin,

653 F.2d 364, 371 (1981), the Ninth Circuit concluded

that, until a developer submitted a development plan, it

was “impossible to determine whether” two pieces of

real property “ought to be treated as one parcel or as

two.” In Machipongo Land & Coal Co. v. Common-

wealth, 799 A.2d 751, 768-769, cert. denied, 537 U. S.

1062 (2002), the Supreme Court of Pennsylvania did not

identify the relevant parcel, but instead remanded to a

lower court for further analysis. The only issue on ap-

peal in Vulcan Materials Co. v. City of Tehuacana, 369

F.3d 882 (5th Cir. 2004), was the property owner’s

“takings claim under the Texas Constitution,” 2d. at 884

(emphasis added), and the Fifth Circuit’s limited holding

was that, in defining the relevant parcel, it would con-

Rptr. 737, 744-745 (Ct. App. 1990)). Such a conflict would not warrant

this Court’s review. In any event, there is no conflict, because that case

involved an alleged taking of real property, and the court simply de-

termined that, given the particular facts and circumstances of that case,

a 1.7 acre plot of land constituted the relevant parcel for purposes of a

takings analysis. See id. at 744-746.

sider only property that the relevant government entity

had “authority to regulate,” 7d. at 889; see zd. at 889-891.

And Department of Agriculture & Consumer Services v.

Mid-Florida Growers, Inc., 521 So. 2d 101, 104 (Fla.),

cert. denied, 488 U.S. 870 (1988), did not address any

questions about the definition of the relevant parcel for

purposes of a regulatory takings analysis. Rather, that

decision addressed a certified question about whether

the State of Florida could destroy healthy, but suspect,

citrus plants without paying compensation. /d. at 102.

c. Even if questions concerning the proper approach

to a Penn Central economic impact analysis otherwise

warranted this Court’s review, this case would be an

unsuitable vehicle for considering them. As the phrase:

suggests, the “parcel as a whole” rule (see Tahoe-Sierra,

535 U.S. at 331) is most often applied in cases involving

land-use regulation. Petitioner’s complaint, however, is

not with any restriction placed on the use of its land, but

with temporary limits placed upon the interstate sale of

personal property (eggs) for commercial purposes in an

industry that is heavily regulated to protect public

health and safety. Although “parcel as a whole” princi-

ples may inform the takings inquiry in cases involving

personal as well as real property in appropriate circum-

stances, the constitutional rules developed in one con-

text will often not be readily applicable to the other. Cf.

Lucas, 505 U.S. at 1027-1028 (“[I]n the case of personal

property, by reason of the State’s traditionally high de-

gree of control over commercial dealings, [a property

owner] ought to be aware of the possibility that new reg-

ulation might even render his property economically

worthless.”).

The temporary nature of the pertinent restrictions

further underscores the idiosyncratic nature of the “eco-

nomic impact” question presented here. Thus, although

petitioner’s costs exceeded its income with respect to

eggs from three of its farms during the 25-month period

that those farms were subject to USDA-imposed restric-

tions, petitioner presumably experienced a profit on its

sales of eggs from those farms both before and after the

restricted period. See note 2, supra. Those profits, in

turn, could be expected to reflect the long-term benefi-

cial effects of USDA’s program, as well as the risk in-

herent in a business of this sort that its operations might

on occasion be subject to special restrictions to protect

public health and safety. A narrow focus on economic

impact only during the temporary period in which re-

strictions were in place would ignore the broader com-

mercial context in which petitioner operates. These and

other dissimilarities between this case and the setting in

which the “parcel as a whole” analysis typically is ap-

plied provide additional reasons for this Court to deny

the petition for a writ of certiorari.

2. Petitioner also asserts (Pet. 21-24) that the court

of appeals used an “[im]proper metric for assessing eco-

nomic impact for a going business concern like [peti-

tioner].” Pet. 24. Specifically, petitioner asserts that

the court of appeals erred in applying a “diminution in

value” approach rather than one focusing on “the per-

centage [of] decrease in profits.” Pet. 23 (citation omit-

ted). That contention does not merit further review.

Petitioner does not assert that the court of appeals’

holding on this point conflicts with the decision of an-

other court of appeals or a state court of last resort.

Instead, petitioner contends (Pet. 22-23) that the court

of appeals’ decision conflicts with its own previous deci-

sions, including the first panel decision in this case.

None of the judges on the unanimous panel that ruled

against petitioner (including Judge Michel, who auth-

ored both panel decisions) perceived any such conflict,

and the court of appeals denied petitioner’s petition for

rehearing en banc without recorded dissent. Moreover,

an intracircuit conflict would not warrant this Court’s

review in any event. See Wisniewski v. United States,

353 U.S. 901, 902 (1957) (per curiam).*

The court of appeals’ decision to apply a diminution

in value approach in this case also was correct. As the

court of appeals explained, when this Court “has as-

sessed the economic impact of a regulatory taking, it has

talked almost exclusively in terms of lost value rather

than lost profits.” Pet. App. 17a (citing cases).° Peti-

tioner does not address any of those decisions, nor does

it provide any response to the court of appeals’ detailed

explanation (see zd. at 16a-31a) of why the CFC’s exclu-

sive reliance on a diminution-in-profits approach was

inappropriate in this case.

The regulatory measures at issue here, moreover,

did not require the destruction of the eggs in question.

Rather, those measures simply required that the eggs

be sold only for uses entailing pasteurization, which

would remove the risk of salmonella infection, rather

than for use as table eggs. That restriction reduced the

overall value of eggs sold from three farms by only ap-

proximately 10%. See Pet. App. 15a, 31a, 49a. As the

* Although the Federal Circuit is generally “the sole appellate court.

that hears takings claims against the [Federal] Government,” Pet. 23,

both state and other federal circuits may entertain takings claims

against state and local governments and thus may be called on to apply

Penn Central in circumstances that are analogous to this case.

® The decisions cited by petitioner (Pet. 21-22) are not to the con-

trary. This Court’s statement in Penn Central that the plaintiff was

able “to obtain a ‘reasonable return’ on its investment” did not focus on

the profits that the plaintiff might have made in the absence of the

relevant regulation. 438 U.S. at 136. Of the other four of this Court's

decisions cited by petitioner, three pre-date Penn Central and thus do

not address the proper application of Penn Central's economic impact

prong. The fourth decision—First English Evangelical Lutheran

Church v. County of Los Angeles, 482 U.S. 304 (1987)—did not discuss

Penn Central’s economic impact prong.

court of appeals pointed out, no case has found a taking

based on such a relatively minor reduction in value. Jd.

at 3la.

3. Finally, petitioner argues (Pet. 24-33) that the

court of appeals erred in analyzing the “character” of

the salmonella regulations. That contention also does

not merit further review.

a. The court of appeals’ analysis of the “character”

factor was correct and consistent with this Court’s deci-

sions. In Penn Central, this Court explained that “[a]

‘taking’ may more readily be found when the interfer-

ence with property can be characterized as a physical

invasion by government, than when interference arises

from some public program adjusting the benefits and

burdens of economic life to promote the common good.”

438 U.S. at 124 (citation omitted).

As the court of appeals explained, this Court’s pre-

and post-Penn Central decisions establish that the pub-

lic health and safety character of a challenged regulation

is relevant to any takings inquiry. See Pet. App. 42a-

43a, 75a-76a (citing Miller v. Schoene, 276 U.S. 272, 279-

280 (1928); Mugler v. Kansas, 123 U.S. 623, 668 (1887);

and Keystone Bituminous, 480 U.S. at 488-492). “[N]o

individual has a right to use his property so as to * * *

harm others,” id. at 492 n.20, and the regulations at is-

sue in this case were designed to protect the public

from serious health risks posed by a particular food pro-

duct following the traceback to petitioners’ farms of

salmonella-contaminated eggs. Accordingly, it was rea-

sonable to impose upon participants in the relevant in-

dustry the costs inherent in protecting the public from

those dangers, especially when, as here, the source had

been traced to petitioner. See Connolly v. Pension Ben-

efit Guar. Corp., 475 U.S. 211, 225-226 (1986) (rejecting

takings liability when employers withdrawing from a

pension fund were assessed an amount to remedy the

harms caused by their actions). Indeed, as the court of

appeals explained, restrictions on “the selling of food for

human consumption” are “the type of regulation in

which the private interest has traditionally been most

confined and governments are given the greatest leeway

to act without the need to compensate those affected by

their actions.” Pet. App. 44a (citing cases).

Petitioner errs in asserting that this Court’s decision

in Lingle v. Chevron U.S.A. Inc., 544 U.S. 528 (2005),

“called into question the ongoing role that the ‘charac-

ter’ factor from the Penn Central test should play.” Pet.

24. Lingle raised no questions about the proper applica-

tion of the Penn Central test for assessing regulatory

takings claims. Instead, Lingle disavowed language in

previous decisions that had “been read to announce a

stand-alone regulatory takings test that [was] wholly

independent of Penn Central or any other test.” Lingle,

544 U.S. at 540. The Court emphasized that its decision

“d[id] not require [it] to disturb any of [its] prior hold-

ings,” id. at 545, and Lingle did not purport to overrule

or modify any portion of Penn Central. Accordingly, the

court of appeals correctly determined that “Lingle nei-

ther addressed nor disturbed Penn Central’s consider-

ation of the health and safety aspect of the regulations.”

Pet. App. 39a.

b. The court of appeals’ analysis of the “character”

factor also did not result in a decision that conflicts with

the decisions of state courts of last resort cited by peti-

tioner. See Pet. 25. None of those decisions held that

Lingle bars consideration of a regulation’s public health

and safety purpose. In Buhmann v. State, 201 P.3d 70

(2008), cert. denied, 130 S. Ct. 394 (2009), the Supreme

Court of Montana rejected a regulatory takings claim

after concluding that the “character” factor weighed in

favor of the government and against the plaintiff. /d. at

94. Although the court stated without explanation or

elaboration that it “disagree[d] with” a portion of the

trial court’s analysis of the character factor in that case

“because it inquired into the purposes and propriety of

[the regulation in question] in a manner foreclosed by

Lingle,” id. at 92, the court had previously described the

inquiry that Lingle “foreclose[d]” as one into whether

the regulation was “effective in achieving any of the ob-

jectives or concerns it was designed to address,” id. at

77 n.2 (emphasis added).

The court of appeals’ decision also does not conflict

with Wensmann Realty, Inc. v. City of Eagan, 734

N.W.2d 623 (Minn. 2007) (Wensmann). Wensmann

made clear that “the relevant considerations [in conduct-

ing Penn Central’s “character” inquiry] may vary de-

pending on the circumstances of the case,” and, in that

case, the Supreme Court of Minnesota considered the

underlying purpose of the government-imposed restric-

tions on private property, observing that they “seem/[ed]

aimed at things that have been considered governmental

functions.” Jd. at 639-640. Wensmann thus did not hold

that a court’s inquiry into the character of a government

regulation may not include consideration of the regula-

tion’s purpose of protecting public health and safety.

Finally, as petitioner acknowledges (Pet. 25), Mann v.

Georgia Department of Corrections, 653 S.E.2d 740 (Ga.

2007), expressly assumed for purposes of its decision

“that the substantiality of the public purpose advanced

by a regulation is still pertinent to a takings challenge,”

id. at 745 (emphasis added), but found in favor of

the plaintiff with respect to one particular regulation

based on its assessment of the economic impact and

investment-based expectations prongs of the Penn Cen-

tral test, ibid.

4. Further review also is unwarranted because, con-

trary to the court of appeals’ conclusion (see Pet. App.

74a-75a), Penn Central's “reasonable investment-backed

Dell

expectations” factor also favors the government in this

case.® As the court of appeals explained, the sale of food

has long been subject to stringent laws to protect public

health and safety. See id. at. 40a-43a. And since 1970,

Congress has sought to protect the health of human con-

sumers by mandating federal inspection of egg products

moving in interstate commerce. See Egg Products In-

spection Act, Pub. L. No. 91-597, § 5(a), 84 Stat. 1624 (21

U.S.C. 1034(a)); 21 U.S.C. 1033(a)(1). Given the long-

standing regulatory history in this area, petitioner could

not reasonably have anticipated that it would be allowed

to transport in interstate commerce eggs that posed an

unacceptable risk of serious harm to human health.’

® When petitioner previously sought a writ of certiorari following

the court of appeals’ first decision in this case, the United States

filed a conditional cross-petition for a writ of certiorari (No. 04-1311)

with respect to the court of appeals’ treatment of the “reasonable

investment-backed expectations” factor. At that point, however, there

was no final judgment, because the court of appeals had vacated the

CFC’s decision and remanded for further proceedings. Pet. App. 90a.

Now, in contrast, the United States has a final judgment in its favor,

and “[ijt is well accepted” that a respondent that does not “seek to

modify the judgment below * * * may, without filinga * * * cross-

petition, . . . rely upon any matter appearing in the record in support

of the judgment.” Union Pac. RR. v. Brotherhood of Locomotive

Eng'rs Gen. Comm. of Adjustment, No. 08-604 (Dec. 8, 2009), slip op.

10-11 (internal quotation marks and citation omitted).

’ The gravamen of petitioner’s takings claim is that only a small

percentage of its eggs were salmonella-contaminated during the rele-

vant period, and that the government had no regulatory justification for

restricting the sale of “healthy eggs.” Pet. 2. In its first decision, how-

ever, the court of appeals rejected as clearly erroneous the CFC’s find-

ing that egg testing was a feasible means of assessing the extent of sal-

monella contamination during the relevant period. Pet. App. 8la. [In

light of the inefficacy of that approach during the relevant time period,

the agency was required to devise an alternative methodology for iden-

tifying those eggs that were linked to salmonella, namely, by testing

hens. The consequences of human consumption of salmonella-contami-

In concluding that the “reasonable investment-

backed expectations” factor favored petitioner, the court

of appeals stated that the salmonella regulations in-

truded on legitimate reliance interests because “[t]hey

were grounded in new scientific understanding (i.e., that

salmonella could be transmitted from hen to egg) and

were unprecedented in their reliance on environmental

and hen testing.” Pet. App. 74a-75a. That discussion

reflects a fundamental misunderstanding of the signifi-

cance for Just Compensation Clause analysis of a

takings plaintiff’s reasonable investment-backed expec-

tations.

In assessing regulatory takings claims, this Court

has recognized that “[t]hose who do business in the reg-

ulated field cannot object if the legislative scheme is

buttressed by subsequent amendments to achieve the

legislative end.” Connolly, 475 U.S. at 227 (quoting

FHA v. Darlington, Inc., 358 U.S. 84, 91 (1958)); see

Concrete Pipe, 508 U.S. at 645. Thus, for purposes of

Penn Central analysis, a property owner ordinarily has

no reasonable expectation of being allowed to continue

an ongoing activity in the face of new evidence that the

nated eggs are severe enough, moreover, that the government could

properly ban (or restrict) the interstate transportation of categories of

eggs that were found to pose a heightened danger, even though there

may have been a relatively small probability that any particular egg

within the category was contaminated. In addition, even small numbers

of salmonella-contaminated eggs can pose particularly great risks, be-

cause, when numerous eggs are pooled together for preparation of a

recipe (as in a restaurant setting), “[a] single infected egg can contami-

nate the whole pool.” C.A. App. 210. Thus, while the pertinent USDA

regulations had the effect of preventing petitioner from marketing as

table eggs millions of uncontaminated eggs, that restriction was an

unavoidable consequence of the agency’s reasonable efforts to address

the health risks posed by the eggs produced by petitioner that were

contaminated. See Pet. App. 78a-81a.

conduct will cause significant public harm. Rather, the

owner may fairly be charged with knowledge that exist-

ing regulatory safeguards can be strengthened or ex-

panded in light of new information concerning the likely

effect upon the public welfare of particular private con-

duct.

That approach to the assessment of reasonable

investment-backed expectations is fully consistent with

the overriding purpose of the Just Compensation

Clause, which is to “bar 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). A

property owner who is forced to cease or modify com-

mercial activity that poses a serious risk to public health

cannot claim to have been unfairly singled out simply

because the relevant activity may once have been viewed

as posing less of a risk. The unreasonableness of any

such expectation is particularly apparent where, as here,

the restriction that is claimed to effect a taking merely

supplements an established regulatory scheme that has

long served to prevent the same basic type of harm at

which the new restriction is directed. To treat such

modifications as interfering with reasonable investment-

backed expectations would substantially hinder the ef-

forts of federal and state governments to protect the

public health and safety by revising their regulatory

programs to take account of new scientific information.

Thus, even if the specific danger (hen-to-egg trans-

mission of salmonella) at which the 1990 USDA regula-

tions were directed had truly been unforeseeable at an

earlier time, the government would not have interfered

with petitioner’s reasonable investment-backed expecta-

tions by adapting its enforcement scheme in response to

a “new scientific understanding” (Pet. App. 75a) that

such a risk existed. The court of appeals’ assertion

(1bid.) that the salmonella regulations “were unprece-

dented in their reliance on environmental and hen test-

ing” is even further beside the point. So long as the

testing methodology used by the agency was an other-

wise reasonable means of determining whether peti-

tioner’s eggs were safe for human consumption as table

eggs—and both the Seventh and Federal Circuits con-

cluded that it was, see pp. 4-8 & n.7, supra; Pet. App.

8la—petitioner had no legitimate reliance interest in

resisting restrictions based on its use, regardless of

whether that testing methodology differed substantially

or only incrementally from prior testing regimes.

® In fact, neither USDA’s conclusion that salmonella in eggs posed

a serious risk to human health, nor the testing program mandated by

the 1990 regulations, reflected a dramatic departure from prior under-

standings. “In the late 1980’s, the [CDC] determinec there was a grow-

ing problem with [salmonella] in chicken eggs.” Pet. App. 125a. In

August 1988, USDA stated that the salmonella “problem [had| become

a serious human health issue.” C.A. App. 197, 199. A scholarly paper

published in 1988 discussed the scientific evidence suggesting transmis-

sion of salmonella from hen to egg, and it explained that “[lJong-term

control of [salmonella] infections will require study of the ecology of the

organism in poultry flocks.” Michael E. St. Louis et al., The Emergence

of Grade A Eggs as a Major Source of Salmonella enteritidis Infec-

tions, 259 JAMA 2103, 2106 (1988) (C.A. App. 248). Petitioner, a major

participant in the national egg market, should surely have been aware

of those developments. Indeed, the first restrictions were not placed on

the interstate sale of eggs from petitioners’ farms until October 5, 1990,

almost eight months after the interim regulations were published on

February 16, 1990. See Pet. App. 5a, 7a.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.