“Today, the court reaffirmed the obvious constitutional principle that, if the government decides to take someone's property for its own use, the government must pay for it.”
-- Carrie Severino
Chief Counsel, Judicial Crisis Network

U.S. Supreme Court: Compensation Due When U.S. Takes Personal Property

June 22, 2015

In a decision favoring a raisin-grower's claim that the government took his personal property – raisins – without just compensation, the U.S. Supreme Court on Monday may have planted the seed of a bigger headache for local governments, environmentalists and others.

The high court ruled, 8-1, that the Fifth Amendment's takings clause requires the government to pay just compensation when it takes personal property, just as when it takes real property.

"Government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home," Chief Justice John Roberts Jr. wrote, explaining that nothing in the text or history of the takings clause or the high court's precedents suggested a different rule when the government appropriates personal property.

The "sweeping nature" of the court's reasoning is "very disturbing," said John Echeverria of Vermont Law School, who filed an amicus brief supporting the government on behalf of the International Municipal Lawyers Association.

"Does this new per se rule for personal property apply to [U.S. Food and Drug Administration] seizures of adulterated drugs?" he asked. "Does it apply to local officials' seizure of abused animals? Common sense suggests the answers to these question must be no. But Chief Justice Robert's logic does not seem to allow for these common sense answers."

While agreeing that the court announced a "sweeping rule," Nestor Davidson, director of the Fordham University School of Law Urban Law Center, suggested it would "likely be limited in scope, given the unusual nature of the program at issue."

But business, conservative and libertarian organizations, many of which filed amicus briefs in the case, hailed the ruling.

"The decision confirms what should be obvious: The government cannot come and take your personal property without compensation, whether raisins or other property, on the ground that the taking is for your own good," said J. David Breemer, a principal attorney for the Pacific Legal Foundation, which supported the raisin grower in the high court.

"When the government appropriates property, the Constitution requires it to pay the owners—even when the government believes the taking will somehow benefit the owner or the public in general," he said.

The decision in Horne v. U.S. Department of Agriculture arose from an enforcement action against Marvin and Laura Horne, owners of Raisin Valley Farms in California. Under the Agricultural Marketing Agreement Act of 1937, the secretary of Agriculture may issue "marketing orders" to help maintain stable markets for particular agricultural products. In 1949, as set out in the law, two-thirds of raisin growers agreed to a marketing order for their product, which had been subject to wide price fluctuations.

A marketing order for raisins requires growers in certain years to give a percentage of their crop to the government, free of charge. The Raisin Administrative Committee, composed largely of growers and others in the raisin business appointed by the agriculture secretary, decides each year how much of the crop to put into a "reserve pool" and keep out of the market. The pool may be exported or used for nonmarket purposes. Any proceeds, after administrative costs, are divided among the raisin growers.

During arguments in April, the government's counsel said there were "dozens" of marketing orders but that about eight to 10, like the raisin program, may require reserves of the products, including tart cherries, walnuts and prunes.

The Hornes participated in the program for about 30 years but, in 2003 and 2004, refused to put a portion of their crop into the reserve pool as required by a marketing order. They were ordered to pay a penalty of almost $500,000. They subsequently claimed the program was a per se taking without just compensation under the Fifth Amendment. [A link to a video about the Hornes' case appears here in the original article.]

In his opinion, Roberts traced protection of personal property from government takings back at least 800 years to the Magna Carta, which, he wrote, specifically protected agricultural crops from uncompensated takings. And, he added, the colonists brought those principles to the New World.

"Raisin growers subject to the reserve requirement thus lose the entire 'bundle' of property rights in the appropriated raisins: the rights to possess, use and dispose of' them — with the exception of the speculative hope that some residual proceeds may be left when the government is done with the raisins and has deducted the expenses of implementing all aspects of the marketing order," Roberts wrote.

He rejected the government's argument that no taking occurs when a contingent interest is left with the owner — here, any net profits from the disposal of the reserve raisins.

"The fact that the growers retain a contingent interest of indeterminate value does not mean there has been no physical taking, particularly since the value of the interest depends on the discretion of the taker, and may be worthless, as it was for one of the two years at issue here," he wrote.

He also rejected the government's argument that the raisin growers voluntarily give up their product as a "condition" on permission to engage in the raisin market.

"According to the government, if raisin growers don't like it, they can 'plant different crops,' or 'sell their raisin-variety grapes as table grapes or for use in juice or wine,'" Roberts wrote. "'Let them sell wine' is probably not much more comforting to the raisin growers than similar retorts have been to others throughout history. In any event, the government is wrong as a matter of law."

The government already has calculated the amount of just compensation owed the Hornes: the fine imposed on them for failing to turn over their raisins—$483,843.53, Roberts said. Their remedy is relief from that fine and any other penalties, he added.

Justice Stephen Breyer, joined by justices Ruth Bader Ginsburg and Elena Kagan, concurred in part and dissented in part. He said the case should be remanded to determine whether any just compensation was actually due.

"The reserve requirement is intended, at least in part, to enhance the price that free-tonnage raisins will fetch on the open market," Breyer wrote. If, by limiting supply, the reserve program results in higher prices for the unreserved raisins sold on the free market, he said, then the marketing order, in effect, provided the just compensation for the owners.

"If that is correct, then the reserve requirement does not violate the takings clause," he said.

Justice Sonia Sotomayor, in a separate dissent, said the Hornes retained at least one meaningful property interest in the reserve raisins: the right to receive some money for their disposition. A 1982 high court precedent, she wrote, requires that each and every property right be destroyed by governmental action before that action can be said to have effected a per se taking. "Because the [marketing] order does not deprive the Hornes of all of their property rights, it does not effect a per se taking."

The International Municipal Lawyers Association had warned in its amicus brief that a holding that a per se taking of personal property had occurred "would encourage frequent violations of zoning laws, historic preservation ordinances, and other local rules and regulations, threatening the economic health and livability of our communities."

However, Carrie Severino, chief counsel of the Judicial Crisis Network, said, "Taking property is taking property, whether it's a middle-class family home or fresh raisins. Today, the court reaffirmed the obvious constitutional principle that if the government decides to take someone's property for its own use, the government must pay for it."

Copyright 2015, ALM Media

From: Marcia Coyle, "Supreme Court Brief; Court: Compensation Due When U.S. Takes Personal Property," National Law Journal, June 22, 2015, http://www.nationallawjournal.com/supremecourtbrief/id=1202730149663/Court-Compensation-Due-When-US-Takes-Personal-Property, accessed 06/23/2015.  Marcia Coyle can be reached at mcyole@alm.com.  Reprinted in accordance with the "fair use" provision of Title 17 U.S.C. § 107 for a non-profit educational purpose.

Tulanelink is grateful to Bob Hurt for bringing the Hornes' case to the public's attention.