The opinions in June’s ruling by a sharply-divided Supreme Court, Knick v. Township of Scott, No. 17-647 (June 21, 2019) employed a lot of very evocative language: "aborning," "Catch-22," "loot," "shaky," "sue me," "overthrows," "smashes," "smithereens" "first crack," "points for creativity." But ultimately, the most important word from the case was "overruled."
Here are your Bottom Lines Up Front, and the lenses through which the Chief Justice Roberts-authored majority, and the dissent by Justice Kagan should be viewed:
First, Williamson County's state-litigation ripeness requirement overruled. Not cut back, not worked around, not questioned. Overruled. A federal court takings challenge is ripe if the regulation takes property, and the government hasn't already provided compensation. Property owners have no obligation to "ripen" their federal claim by chasing down the local government for compensation in state court via a state law inverse condemnation claim, and only being allowed into federal court if they lose that lawsuit. And then being precluded from pursuing the federal claim on the merits by res judicata principles.
Second, at long last, it seems that a majority of the Justices understand what the property bar has been saying for decades: the essence of a federal takings claim against a local or municipal government is that a regulation deprives an owner of "productive use" of property and the government has not provided compensation (past tense). So nearly 100 years after Justice Holmes famously opined for the Court in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), that if a regulation goes "too far" it will be recognized as a taking, we have the Court finally expressing clearly what that cause of action looks like; Knick is the first time that the modern Court has plainly stated the precise nature of the constitutional violation.
Third, the unstated, but fundamental, world view difference between the Knick majority and the dissenters is that the dissenters viewed state courts as part-and-parcel of a local government's compensation mechanism, while the majority assumed (rightly) that state courts are a separate branch of state governments.
Williamson County , Regulatory Takings Ripeness, and Reverse Percolation
A federal regulatory takings claim is the idea which was first articulated in the modern era in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), that if a regulation goes "too far" in restricting the owner's use, it will be recognized as a taking for which the Fifth and Fourteenth amendments mandate the payment of compensation. In other words, if a local government's regulation restricted an owner's use severely it was, from the owner's viewpoint, tantamount to an exercise of eminent domain. For more than 60 years, there wasn't a serious question that these claims could be asserted by property owners against local governments in federal court.
But in 1985, in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), mostly out of nowhere the Supreme Court created two procedural prerequisites which owners had to show before their federal takings claims were considered ripe for federal court. First, the regulating agency had to have made the final decision on what uses are allowed under the regulation. If the agency's process isn't complete, there's no way for a reviewing court to tell what uses of the property remain. This is known as the "final decision" requirement.
Second, the owner must not only have been denied compensation by the local government, she must also sue the local government in state court for inverse condemnation, to try and force it to pay compensation for the regulatory taking. In what become known as the "state-litigation" requirement, the Williamson County Court reasoned that the Fifth Amendment does not make the a taking of property unconstitutional, only a taking “without just compensation.” Because the local government had not denied compensation until it lost the owner's state court lawsuit to recover compensation, the constitutional wrong does not occur until the state's supreme court rules for the government, ripening the unconstitutional act: a taking "without just compensation." Only then was the case ripe for federal review.
One additional dynamic contributed to the chaos. As noted above, Williamson County adopted the state-litigation rule without benefit of party briefing or argument, and without a developed body of scholarly work as foundation. In doing so, it reversed the usual process of getting an issue up to the Supreme Court. Usually, issues contentious enough to merit Supreme Court review are most often allowed (even required) to “percolate” for years in the lower courts and law journals, before the Court is ready to take them up. That way, the Court can consider the question presented after appropriate study by bench, academy, and bar. That script, however, was switched in Williamson County,. Much of the reason why the Court's analysis was so fallacious and subject to easy attack was that none of the parties in Williamson County had raised or briefed ripeness. The issue the parties were arguing about was whether a restriction on the use of property that is eventually lifted could be a temporary taking requiring compensation (an argument later resolved by the Court positively in First English).
There, the Court, however, adopted the state-litigation requirement on its own, adopting the argument made by the Solicitor General in an amicus brief. And and only after the opinion was issued then did the bar, legal scholars, and lower courts begin to debate the rule's validity. And spent the next 30-plus years doing so. Only in Knick did the Court finally get full briefing of the issue.
Almost immediately after the Court issued the Williamson County opinion, commentators began to take apart the case's rationale. See, e.g., Michael M. Berger, Anarchy Reigns Supreme, 29 Wash. U. J. Urb. & Contemp. L. 39, 40 (1985) ("Williamson County] takes its place in the pantheon of indecision ... as demonstrating that those learned in the ways of the law can always find a way to duck an issue. With all due respect, the ... decision is both bad law and bad government.").
For the next three decades, the deconstruction of the decision by the bar and the legal academy continued unabated. Government lawyers had a very potent tool in their quiver, and legal scholars who supported the Williamson County state-procedures rule (or, more accurately, the limitations it placed on property owners' rights) searched for rationales to justify it (federalism, comity, and even textualism, for example).
Much of the reason why the Court's analysis was so fallacious and subject to easy attack was that none of the parties in Williamson County had raised or briefed ripeness. The issue the parties were arguing about was whether a restriction on the use of property that is eventually lifted could be a temporary taking requiring compensation (an argument later resolved by the Court positively in First English).
The U.S. Solicitor General, however, as amicus curiae argued that federal courts could not even hear a federal claim for compensation (permanent, temporary, or otherwise) until the owner lost a state law inverse claim in her state's highest court or could show that the remedy was not available under state law. The Court latched on to that argument and adopted it as a wall around the federal courts for takings claims.
Only in Knick did the Court finally get full briefing of the issue.
San Remo Catch-22
In theory, a property owner who had the dual luxuries of time and a thick wallet could do what the Court contemplated: after the local government's position was fixed (final decision), the owner could ask the local government for and be denied compensation, sue in state court for compensation, lose in the highest state court, and then with a now-ripe federal claim in hand bring a Fifth Amendment takings complaint in federal court. But as a practical and procedural matter, owners never got anywhere, and Williamson County amounted to a requirement for a plaintiff to exhaust state remedies, a requirement that no other federal civil rights plaintiff had to adhere to.
In San Remo Hotel v. City and County of San Francisco, 545 U.S. 323 (2005), the Court took Williamson County's flawed logic to its inevitable end. It endorsed a "too early or too late" theory that goes like this: the very process by which an owner ripened a federal takings claim (chasing and eventually losing an inverse condemnation lawsuit in state court), also meant that when the owner later asserted an appropriately ripened federal takings claim in federal court, that claim would be deemed precluded by res judicata and full faith and credit principles. Because resolving the state inverse claim as Williamson County required meant that the owner had also thereby litigated the future unripe federal takings claim (even where owners expressly tried not to -- no England reservations allowed!). And because a state court would consider a subsequent federal takings claim precluded by res judicata, so must the federal court as a matter of full faith and credit.
The short story was that if an owner filed a federal takings claim in federal court without losing first in state court, it was early under Williamson County. And if the owner followed Williamson County's rule and went through state process first, it would be barred by res judicata when the federal claim became ripe as being too late. Joseph Heller could not have written it better.
The Catch-22 nature of this prompted four Justices to note in San Remo that the Williamson County experiment was due for another look. Chief Justice Rehnquist wrote:
Finally, Williamson County's state-litigation rule has created some real anomalies, justifying our revisiting the issue... I joined the opinion of the Court in Williamson County. But further reflection and experience lead me to think that the justifications for its state-litigation requirement are suspect, while its impact on takings plaintiffs is dramatic... In an appropriate case, I believe the Court should reconsider whether plaintiffs asserting a Fifth Amendment takings claim based on the final decision of a state or local government entity must first seek compensation in state courts.
The four concurring Justices, however, were not interested in San Remo of overruling Williamson County, simply because the property owners hadn't expressly asked them to do so.
City of Chicago v. International College of Surgeons, 522 U.S. 156 (1997) added to the problem. There, the Court held a governmental defendant could remove to federal court under federal question "arising under" jurisdiction a takings case brought in state court by the property owner (as Williamson County required it to do). This resulted in the asymmetry where a regulatory takings plaintiff could not raise a federal takings claim in federal court, but the local government or state defendant could remove the state court case to federal court. And then, in some of the more extreme examples, some courts didn't blink when the defendant, which had removed the case to federal court sought dismissal of the takings claim because the case wasn't ripe because the state courts had not yet rejected the owner's claim for compensation. Several courts rejected this sleight-of-hand. Even sanctioning the government for playing that game. But many didn't.
As a result, for thirty-plus years, property owners, their lawyers, legal scholars, and the courts struggled. State court judges were educated on takings law, but the only hope of having a federal court actually consider a federal takings claim was the thin reed of theU.S. Supreme Court’s certiorari review of a state court judgment. And that's a very thin reed. This scheme kept many claims from being resolved at all. Many property owners who were not willing to pay their lawyers to contribute materials for Federal Courts treatises or otherwise endure years of pointless procedural wrangling declined to pursue their rights, and thus ended up throwing in the towel.
The facts in Knick are deceptively simple. The Township required owners of all cemeteries, public or private, to maintain them, and required the owners to keep them open to the public during the day, and to allow code inspectors to enter to inspect for compliance. Under the authority of the ordinance, a code inspector came on Rose Mary Knick's property without a warrant, and told her to clean up the cemetery, and wrote her up. Knick sued in state court, seeking to enjoin the enforcement action. The Township withdrew the notice of violation and the parties agreed to stay enforcement actions. But Knick didn't file an inverse condemnation action, or include a claim for compensation in her state court challenge.
After the Township issued a second notice of violation of the ordinance and the state court denied Knick's request for a contempt order, she sued in federal court, asserting a violation of her Fourth Amendment rights against warrantless searches, and her Fifth and Fourteenth Amendment rights to due process and just compensation. The District Court dismissed the action because Knick had not exhausted her state law remedies and her federal takings claim was not ripe.
The Third Circuit affirmed, even though the court "recognize[d] that the Ordinance's inspection provision 'is constitutionally suspect and we encourage the [Township] to abandon it (or, at least, to modify it substantially)" under Williamson County. As noted earlier, she had not sought compensation via available Pennsylvania procedures. The court rejected each of her three arguments that she didn't need to pursue just comp in Pennsylvania courts.
Until Knick, when the Court agreed to consider whether to expressly overrule the state-litigation requirement, it had declined to review several cases which raised the same issue.
The majority opinion began by laying out the one-two punch of Williamson County and San Remo: "The takings plaintiff thus finds himself in a Catch-22: he cannot go to federal court without going to state court first; but if he goes to state court and loses, his claim will be barred in federal court. The federal claim dies aborning." Slip op. at 1-2. [Note: even if the plaintiff wins in state court, he has no federal claim because by awarding compensation, the state court has in effect mooted the without just compensation problem.] "The San Remo preclusion trap should tip us off that the state-litigation requirement rests on a mistaken view of the Fifth Amendment." Slip op. at 2.
CJ Roberts’ Majority
The majority opinion, authored by Chief Justice Roberts, concluded that takings are a constitutional concern, and not a matter of subject matter jurisdiction or statute, and expressly overruled Williamson County. “A property owner has an actionable Fifth Amendment takings claim when the government takes his property without paying for it.” Slip op. at 2.
The majority also summarized the biggest analytical hurdle, Williamson County's rationale, supposedly based on the text of the Fifth Amendment, acknowledged that the Fifth Amendment does not require payment contemporaneous with the taking as long as there are procedures in place for the owner "to obtain compensation after the fact." Slip op. at 2. The majority highlighted a distinction that it would delve into deeper later in the opinion -- the difference between equitable remedies for takings and compensation -- and concluded that a federal court § 1983 claim is ripe and may be filed upon the constitutional violation: "when the government takes his property without just compensation[.]" Id.
The majority opinion stuck to two main themes. First, property rights should be treated the same as other Bill of Rights rights. The second theme which the majority employed was the text of the Fifth Amendment: “If a local government takes private property without paying for it, the government has violated the Fifth Amendment -- just as the Takings Clause says -- without regard to subsequent state court proceedings.” Slip op. at 6. The federal claim for compensation "arises at the time of the taking, regardless of post-taking remedies that may be available to the property owner." Slip op. at 7.
Having recognized that the Constitution itself mandates this result, the majority directly attacked Williamson County's rationale, concluding that the obligation to pay compensation when property is taken is "self-executing," and "automatically arises at the time the government takes property without paying for it." Slip op. at 9. Post-violation compensation is a remedy, not an element of a claim. As Chief Justice Roberts wrote, "[a] bank robber might give the loot back, but he still robbed the bank." A later payment of compensation may remedy the constitutional violation that occurred at the time of the taking, but that does not mean the violation never took place. Slip op. at 11.
The majority opinion keyed in on began by laying out the one-two punch of Williamson County and San Remo: "The takings plaintiff thus finds himself in a Catch-22: he cannot go to federal court without going to state court first; but if he goes to state court and loses, his claim will be barred in federal court. The federal claim dies aborning." Slip op. at 1-2. [Note: even if the plaintiff wins in state court, he has no federal claim because by awarding compensation, the state court has in effect mooted the without just compensation problem.] "The San Remo preclusion trap should tip us off that the state-litigation requirement rests on a mistaken view of the Fifth Amendment." Slip op. at 2.
Finally, the Court noted the practicalities: the Williamson County-San Remo combination was "unworkable in practice," slip op. at 22, and the sky won't fall because of the new Knick rule:
Our holding that uncompensated takings violate the Fifth Amendment will not expose governments to new liability; it will simply allow into federal court takings claims that otherwise would have been brought as inverse condemnation suits in state court.
Governments need not fear that our holding will lead federal courts to invalidate their regulations as unconstitutional. As long as just compensation remedies are available -- as they have been for nearly 150 years -- injunctive relief will be foreclosed. For the same reason, the Federal Government need not worry that courts will set aside agency actions as unconstitutional under the Administrative Procedures Act. Federal courts will not invalidate an otherwise lawful uncompensated taking when the property owner can receive complete relief through a Fifth Amendment claim brought under the Tucker Act.
Slip op. at 23 (citation omitted).
Justice Kagan’s Dissent
As noted above, one of the analytical splits on the Court was whether state courts are part-and-parcel of a municipal government's compensation mechanism. The dissenters pretty plainly thought that state courts were an arm of local government, while the majority considered state courts to be separate. The dissenters in essence also viewed a state court lawsuit as the functional equivalent of a local government's irrevocable promise to pay. The dissenters saw this as nothing more that what follows ("as night the day") from long-standing rules which do not require payment of compensation before or at the time of an affirmative taking by eminent domain. Slip op. at 3-4. But the eminent domain “quick-takes” are only constitutional because in those situations, the condemning agency has made an irrevocable promise to pay. That seems like a far cry from Williamson County’s “sue me for compensation” rationale.
The second fundamental disconnect was that the dissenters rejected the majority's view that property rights should be treated the same as other rights recognized by the Bill of Rights. Instead, they considered the Takings Clause as "unique among the Bill of Rights' guarantees." Dissent at 2. To the dissenters, this is a textual argument (harking back to Williamson County) because in their view, there is no constitutional issue unless and until "the government" denies compensation.
In the last section of the dissent, Kagan vigorously defended "letting sleeping dogs lie" (in Justice Breyer's oral argument words), and argued the Court should not overturn Williamson County for all the reasons that the Supreme Court does not lightly overturn precedent.
The dissent’s stare decisis analysis must be viewed as part of a much larger context, mostly framed by other cases such as Roe and Casey. But whatever might counsel against not lightly overturning precedent in those and other cases, Williamson County was a uniquely bad choice for a stare decisis hill to die on for two main reasons.
First, as noted above, the state-litigation rule which Williamson County adopted sua sponte was the usual percolation process in reverse. The Solicitor General had raised the issue (not the parties), and the Court simply adopted it without the benefit of party briefing, or prior deep consideration by the legal academy or lower courts. Consequently, the rationale which the Court adopted in Williamson County was too clever by half. Nor was the validity and application of the doctrine was never tested or argued directly in the Court in the intervening decades, with a small exception of 2005's San Remo. But even there, the arguments were more focused on preclusion and full faith and credit and why Williamson County didn't control, not why it was fundamentally wrong.:
That leads to the second reason. The last thirty-plus years of experience has starkly revealed how the theory works in practice: it didn’t. What value was there in retaining a procedure that resulted in such overwhelming problems? Even the rule's supporters, as the majority pointed out, do not strenuously defend it for the reasons it was adopted. And even in Knick, the Township didn't really defend it on those grounds. Instead, it couched its arguments in terms of federal jurisdiction and § 1983. Not exactly a resounding endorsement of Williamson County's rationale.
Finally, the dissent complained about the effects that Knick might have on local government. The decision “will inevitably turn even well-meaning government officials into lawbreakers. And it will subvert important principles in judicial federalism.” Dissent at 12. But aren’t local officials no more "lawbreakers" after Knick than before? The only major difference is that they now might have to answer to a federal judge and not a state judge, and can't use Williamson County's state-procedures requirement to whipsaw property owners through years of pointless processes.
So now what?
Final decision: still needed. Williamson County's "finality" ripeness requirement was not challenged by Ms. Knick, and that part of the decision remains good law. In most cases, property owners still need to obtain a final decision from the local government or agency about what uses, if any, may be made of their property under the allegedly restrictive regulation.
Preclusion trap: gone. The overruling of the state-litigation requirement also implicitly overruled the "preclusion trap" Catch-22 from San Remo. An owner may choose to litigate her state law takings or inverse claims in state court, and she does so, she will likely be barred from later raising a federal takings claim, but she is no longer are going to be forced to go to state court in the first instance and raise a state law inverse condemnation claim, only to be later told she thereby litigated the federal takings claim by implication.
Removal: What of the College of Surgeons' removal imbalance? Until Knick, a property owner could not raise a federal takings claim in federal court, but a municipal or state defendant could remove a state court takings action to federal court. Under Knick, a claim seeking compensation is a federal claim, purely and simply. The shenanigans which surrounded the remove-and-dismiss game, as well as the doctrinal imbalance of letting defendants to choose a federal forum while denying plaintiffs that same choice, are over. Defendants have the same ability to remove state court claims to federal court like any other case.
Remedy: most often money. The most common vehicle to raise a Fifth Amendment claim against a local government in federal court is 42 U.S.C. § 1983, and the usual remedy is damages for the failure to pay just compensation. In most cases, a property owner is not going to get a federal court to enjoin a regulatory taking, or declare a statute or regulation unconstitutional. Unless for some reason no compensation is available. For example, what if the defendant is a state, and recovering compensation is barred in federal court by the Eleventh Amendment? If you are prohibited from your legal remedy of compensation, may you ask for an injunction under Ex parte Young?
Jury trial: a property owner raising a § 1983 claim has the right to a jury trial. Knick confirms that it may be a federal jury.
State law inverse condemnation claims: it remains unsettled whether a state law inverse condemnation claim "arises under" federal law and can be brought in federal court. Or whether a property owner has a claim directly under the self-executing Fifth Amendment for an uncompensated taking, without to need to cast it as a § 1983 claim.
Federal takings: the majority took great care to preserve the existing system of regulatory or inverse claims against the federal government, where property owners may seek compensation for relatively small takings in district courts, for takings in excess of $10,000 in the Court of Federal Claims, and all appeals from both courts to the Federal Circuit.
Takings jurisprudence: the final -- and perhaps the hardest -- tea leaf to read is what, if anything, does the Knick opinion mean for success on the takings merits? Does it signal a shift in how the Court is looking at property rights cases? After all, strictly speaking Knick is a procedural ruling, and the Court didn't rule for Ms. Knick on the merits. There may be a compensable taking. Or there may not be. We don't know yet. On its face, Knick does not on its face result in a sea change (even though it might portend one).
In conclusion, the Court has -- nearly a century after Mahon – provided a working cause of action for a federal regulatory taking: if the government has regulated property by either forcing an owner to surrender even a small part of her right to exclude or other fundamental right, or by depriving the owner of "productive use," it has her property has been taken, and . If so, the government's obligation to provide compensation is "self-executing" and arises now. , and does not need to wait. Pursuing and losing a state law inverse condemnation claim is not an element of a federal takings claim. The owner may pursue a compensation remedy now, either in state or federal court.