The Supreme Court Further Expands the Definition of a Physical Taking of Property That Violates Fifth Amendment Protections – JD Supra

At the end of its recent term, the U.S. Supreme Court handed down a new decision on the law of takings. The case, Cedar Point Nursery v. Hassid, was a labor relations dispute disguised as a takings case, but its resolution has important implications for the terms on which New York developers can get access to adjoining property in aid of their construction projects. In Cedar Point Nursery, a divided Court ruled, by a 6-3 vote, that a state regulation authorizing very limited temporary entry by union organizers onto private agricultural property amounted to a physical taking of property that violated the Fifth and Fourteenth Amendments to the Constitution.[1] The decision expands the concept of what is a physical taking and raises questions about the further expansions of takings law that may follow.

The last clause of the Fifth Amendment to the U.S. Constitution, part of the Bill of Rights adopted in 1791, provides: nor shall private property be taken for public use, without just compensation. Although originally applicable only to the federal government, the Fourteenth Amendment, adopted after the Civil War, makes the principle equally applicable to the states and their political subdivisions.[2]

The most obvious example of a taking is when the government or a private party authorized by law to do so (such as a utility) exercises the power of eminent domain to acquire actual ownership of private property, or at least a permanent interest in property. In that situation, a public purpose and just compensation are required by the Constitution.[3] Other situations are not so obvious and have spawned a large body of court decisions addressing countless permutations.

Supreme Court precedent distinguishes between physical takings and regulatory takings. Physical takings are unconstitutional per se (i.e., automatically) in the absence of a public purpose and compensation. By contrast, an owners claim that it has been subjected to a regulatory taking in effect, a claim that although there has been no physical invasion of its property, a law, regulation or other governmental action has intruded so far into its property rights as to amount to a taking must be analyzed and evaluated on a fact-specific, case-by-case basis.

What rises to the level of a physical taking, however, isnt always clear either, and the concept has expanded over the years. In 1946, the Supreme Court held that repeated low-altitude overflights by military aircraft approaching and leaving a nearby airport, the effect of which was to destroy the owners ability to operate their chicken farm, constituted a taking.[4] In 1979, the Court held that the governments claim of a navigational servitude over private property, the effect of which was to allow the public to access the property on a continuous basis, effectuated a taking.[5] And in 1982, the Court held that even a de minimis permanent physical occupation of property is a taking; more specifically, the Court struck down as unconstitutional a New York statute requiring owners of apartment buildings to allow cable TV companies to attach their cables to the owners buildings.[6] Which brings us to the Cedar Point Nursery case.

A regulation under Californias Agricultural Labor Relations Act gave labor organizations a limited right of access to private agricultural property. Access was allowed in no more than four 30-day periods in any one calendar year, and only during three hours during any one day one hour before work, one hour during the lunch break and one hour after work. Access was limited to two organizers per work crew, plus one additional organizer for every 15 workers over 30 workers in a crew. The property owner was entitled to prior notice. Disruptive conduct was prohibited, but the union organizers were otherwise free to meet with employees to discuss labor or union issues.

Cedar Point Nursery is a large California strawberry grower. It claims that, one morning in 2015, United Farm Workers organizers entered its property and disturbed its operations, causing some workers to join a protest and others to leave the worksite. Along with a second grower, it sued in federal court, arguing that Californias regulation effected an unconstitutional physical taking of its property. The trial court dismissed the lawsuit, and a divided U.S. Court of Appeals for the Ninth Circuit affirmed that decision. The Supreme Court agreed to hear the case.

The Court reversed the Ninth Circuits decision and ruled in favor of the nursery. Perhaps not surprisingly, given the cases origin in a dispute about union activity, the Court split along partisan lines, with the six Republican-appointed justices forming the majority and the three Democrat-appointed justices dissenting.

Chief Justice John Roberts wrote for the majority that the access regulation appropriates a right to invade the growers property and therefore constitutes a per se physical taking. The opinion emphasized that the short duration of time during which the regulation allowed entry onto property was irrelevant, and the length of the appropriation bears only on the amount of compensation. The opinion affirmed that physical invasions are takings even if they are intermittent instead of permanent, citing United States v. Causby, the 1946 decision in which the Court held that occasional low-altitude military overflights had effected a taking (although in Causby the overflights had destroyed the owners business).

To reconcile this absolutist definition of a taking with commonly recognized circumstances in which limited entry onto private property has long been allowed, the majority opinion articulated a series of exceptions to this per se rule. First, isolated physical invasions, not undertaken pursuant to a granted right of access, are properly assessed as individual torts rather than appropriations of a property right. Second, access that is consistent with longstanding background restrictions on property rights, including traditional common law privileges to access private property, is another exception. And third, the government may require property owners to cede a right of access as a condition of receiving certain benefits, without causing a taking.

The dissenting opinion was written by Justice Stephen Breyer. It argued that the California regulation did not effect a per se taking because it did not appropriate anything, but only regulated employers right to exclude others from their property.

The Cedar Point Nursery majority and dissenters disagreed about how to distinguish between the appropriation of property and regulation of the right to exclude. Because the Court held that the California regulation allowing limited access by union organizers to agricultural properties was in fact an appropriation, the decision raises questions about how much further the Court might go and how far property rights advocates will push the Supreme Court and lower courts in expanding the concept of a taking.

To begin with, any law or regulation requiring that union representatives be given access to a workplace or job site is now to say the least constitutionally suspect.

In future cases, moreover, courts are likely to be asked to clarify the exception to the per se rule that Cedar Point Nursery recognized for access that is consistent with longstanding background restrictions on property rights. The opinion provided no further definition of this exception beyond a reference to traditional common law privileges. Prior case law from around the country has recognized multiple situations in which entry onto anothers land without the owners permission is allowable, including, for example, to bypass an impassible section of a public road, to retrieve personal property, to abate a private or public nuisance, to stop a crime or to make a lawful arrest.[7] Are all of these examples still good law after Cedar Point Nursery?

Even if these cases remain good law, is only court-made law still valid? One possible implication of the absolutist interpretation of a taking in Cedar Point Nursery is that, while court-made exceptions to the per se rule remain valid, state and local governments are powerless to enact statutes that recognize limited rights of entry in defined circumstances.

In 1980, for example, a unanimous Supreme Court agreed that Californias Supreme Court could properly interpret its state constitution as protecting the right of peaceful protestors to set up a card table in a shopping malls central courtyard, distribute pamphlets and collect signatures over the objection of the malls owner, which maintained a blanket policy against expressive activity on its premises.[8] In reaching this result, the Courts opinion, written by Justice (later Chief Justice) William Rehnquist, explained that, while property does not lose its private character merely because the public is generally invited to use it for designated purposes, that principle does not limit the authority of the State to exercise its police power or its sovereign right to adopt in its own Constitution individual liberties more expansive than those conferred by the Federal Constitution.[9] In response to the mall owners contention that a right to exclude others underlies the Fifth Amendment guarantee against the taking of property without just compensation, the Supreme Courts opinion explained that it is well established that not every destruction or injury to property by governmental action has been held to be a taking in the constitutional sense, and the determination whether a state law unlawfully infringes a landowners property in violation of the Takings Clause requires an examination of multiple factors.[10]

The only way to reconcile this case-by-case approach with the per se rule of Cedar Point Nursery is to rely on the fact that the shopping mall was open to the public, although not for the purpose that the visitors in that case sought to use it, while in Cedar Point Nursery the owners did not open their land to the general public. But the Court specifically said in the shopping mall case (and in prior cases) that private property does not lose its private character even if it is open to the general public a point that is inconsistent with a distinction based on private propertys status as open to the general public.

Closer to home, New York has a statute, Section 881 of the Real Property Actions and Proceedings Law, that empowers courts to grant licenses allowing property owners to gain temporary access to neighboring property for the purpose of effectuating repairs or improvements to their own property upon such terms as justice requires. The statute often has been used by developers and their contractors to compel recalcitrant neighbors to allow them to enter onto adjoining property to perform surveys and install protective measures. The statute does not require compensation, although it is not unusual for courts, in the exercise of their discretion, to require the payment of a fee if the entry is for more than a de minimis length of time for example, if the purpose of the entry is to install and maintain temporary protective scaffolding. Is this statute unconstitutional due to its failure to expressly require the payment of just compensation in accordance with the Fifth Amendment? Or perhaps due to its creation of a right of access in the service of a private purpose rather than a public one? It seems inevitable that these issues and others of a similar nature will be litigated in a future case. The risk of the issue being raised should motivate developers to avoid litigation if possible and to be prepared, if necessary, to augment the usual protections provided in access agreements (such as indemnification and insurance) with some amount of compensation for the temporary intrusion onto a neighbors property.

[1] Cedar Point Nursery v. Hassid, 594 U.S. ___ (No. 20-107, June 23, 2021).

[2] Chicago, Burlington & Quincy Railroad Co. v. City of Chicago, 166 U.S. 226 (1897).

[3] Id.

[4] United States v. Causby, 328 U.S. 256 (1946).

[5] Kaiser Aetna v. United States, 444 U.S. 164 (1979).

[6] Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982).

[7] See, generally, Restatement (Second) of Torts 195-211.

[8] PruneYard Shopping Center v. Robins, 447 U.S. 74 (1980). Members of the Court issued multiple separate opinions explaining their reasoning, but all of the justices agreed with the result.

[9] The internal quotation in PruneYard is from the Courts prior opinion in Lloyd Corp. v. Tanner, 407 U.S. 551 (1972), where the Court upheld the right of a shopping mall owner to prohibit public expression on its premises.

[10] The internal quotation in this excerpt from PruneYard is from Armstrong v. United States, 364 U.S. 40 (1960).

The author gratefully acknowledges the valuable contributions to this alert of Aaron Jacobs, a member of the Columbia Law School Class of 2022 and a 2021 Kramer Levin summer associate.

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The Supreme Court Further Expands the Definition of a Physical Taking of Property That Violates Fifth Amendment Protections - JD Supra