US Supreme Court Sides with Agricultural Employers in Takings Case

Last week, the United States Supreme Court issued an opinion in Cedar Point Nursery v. Hassid, a case involving a California law requiring agricultural employers to allow union organizers to enter the employer’s property.  The employers claimed this was a taking of private property without just compensation, and the US Supreme Court agreed.  [Read Opinion here.]

Photo by Bill Mason on Unsplash

Background 

California law gives agricultural employees the right to self-organization and prohibits employers from interfering with that right.  The California Agricultural Labor Relations Board (CALRB) passed a regulation that requires labor organizations to have the right to access an agricultural employer’s property to meet and talk with employees and to seek their support for unionization.  Under this regulation, agricultural employers must allow union organizers access to their property for up to 3 hours per day, 120 days per year.  In order to have access, a labor organization must file a written notice with the CALRB and provide a copy to the employer.  Organizers may enter the property for up to one hour before work, one hour after work and one hour during the lunch break.  An employer who interferes with this right of access may be guilty of an unfair labor practice, resulting in sanctions.

Cedar Point Nursery grows strawberries in Northern California.  It employs over 400 seasonal workers and 100 full time workers.  The workers do not live on the property.  In October 2015, members of the United Farm Workers (UFW) entered Cedar Point’s property at 5 am, disturbing operations and causing some workers to join a protest, and others to leave the worksite all together.  Cedar Point filed suit against UFW for taking access without giving the required notice.  UFW counterclaimed that Cedar point committed an unfair labor practice.

Fowler Packing Company grows and ships grapes and citrus fruits. It has 1,800-2,500 employees in its field operations and 500 in its packing facility.  None of the workers live on the premises.  In July 2015, UFW attempted to take access to Fowler’s property, but the company blocked entrance.  UFW filed an unfair labor practice charge against Fowler, which was later withdrawn.

Litigation

Because Cedar Point and Fowler believed UFW would likely attempt to enter their property again, they filed suit against several members of the CALRB in their official capacity.  The growers claimed that the access regulation was unconstitutional as it was a per se physical taking of their property without just compensation.  They requested declaratory and injunctive relief preventing the CALRB from enforcing the regulation against them.

The trial court denied the motion for injunction and granted the CALRB’s motion to dismiss.  The court found the regulation did not constitute a per se physical taking because it did not allow the public  permanent and continuous access to the property.  Instead, the court believed, this claim would fall under the Penn Central balancing test analysis of a taking, which the growers had not pled or attempted to satisfy.

The growers appealed, and the US Court of Appeals for the Ninth Circuit affirmed.  The court looked at the three categories of regulatory takings law: (1) regulations imposing permanent physical invasions; (2) regulations depriving an owner of all economically beneficial use of the property; and (3) the remaining regulatory actions analyzed pursuant to Penn Central.  The Ninth Circuit found the access regulation here did not fall within the first two per se takings categories, and agreed with the trial court it should be analyzed under the Penn Central test.  In a dissenting opinion, Judge Leavy viewed the access regulation as a physical occupation, even though it was not allowed to occur 24 hours a day, 365 days per year.  Thus, he would have ruled in favor of the growers.

The Ninth Circuit denied rehearing en banc, but Judge Ikuta, joined by seven other judges, issued a dissent.  She reasoned that because the regulation essentially granted a traditional property right (an easement in gross) to the union members, it was a per se physical taking.

The growers’ Petition for Certiorari to the United States Supreme Court was granted.

Majority Opinion

Chief Justice Roberts issued the opinion of the Court, in which Justices Thomas, Alito, Gorsuch, Kavanaugh, and Barrett joined.

Overview of Takings Case Law

Chief Justice Roberts began with an overview of the US Supreme Court’s takings jurisprudence, outlining the two main categories of cases.

First, cases may fall into the physical takings context.  “When the government physically acquires private property for a public use, the Takings Clause imposes a clear and categorial obligation to provide the owner with just compensation.” Physical takings can occur when property is seized by eminent domain, when the government takes property without acquiring title, or when the government physically occupies property.  These types of physical takings cases “are the clearest sort of taking” and are assessed “using a simple, per se rule: The government must pay for what it takes.”

Second, when the government imposes regulations that restrict an owner’s ability to use his own property, that falls into a separate category of analysis. To determine whether a use restriction effects a taking, the Court applies the Penn Central balancing test, which looks at factors including the economic impact of the regulation, its interference with reasonable investment-backed expectations, and the character of the government action.

The key distinction between these two categories of takings is “whether the government has physically taken property for itself or someone else–by whatever means–or has instead restricted a property owner’s ability to use his own property.”

Analysis of Access Law

The majority held “the access regulation appropriates a right to invade the growers’ property and therefore constitutes a per se physical taking.” Rather than restraining the growers’ use of their property, the regulation appropriates the owners right to exclude for the enjoyment of third parties.  This right to exclude is a cornerstone of private property rights. The right to exclude falls within the interests the government cannot take without paying just compensation. Here, the regulation allows the union organizers to physically invade the growers’ properties, thereby resulting in a per se physical taking for which just compensation is required.

Discussion of Continuous and Permanent Access

Next, the Chief Justice addressed a concern raised by both the Ninth Circuit and Justice Breyer’s dissenting opinion: The regulation does not allow permanent and continuous access 24 hours a day, 365 days per year.  Both the Ninth Circuit and the dissent conclude a per se taking cannot occur if it allows access short of 365 days per year.  Chief Justice Roberts responded, “that position is insupportable as a matter of precedent and common sense. There is no reason the law should analyze an abrogation of the right to exclude in one manner if it extends for 365 days, but in an entirely different manner if it lasts for 364.”

Prior  case law recognized both temporary and permanent physical takings.  The duration or size of the appropriation bears only on the amount of compensation, as was seen in Loretto, a case involving a small cable box.  Further, takings may be intermittent rather than continuous.  For example the Court cited to Causby, a case involving overflights of private property occurring only during 4% of takeoffs and 7% of landings at the airport.   “The fact that a right to take access is exercised only from time to time does not make it any less a physical taking.”

Discussion of Easement Creation

The CALRB and dissent both argue that the regulation did not grant a true easement in gross because there was no right that could be transferred or recorded and did not meet the definition of an easement under state property law.  The majority rejected this argument, finding that the CALRB cannot avoid takings liability by merely mismatching the regulation from state easement law. Again, it is the fact that the growers’ right to exclude is curtailed that results in the taking, the fact that there was no formal condemnation of an easement does not change that. “Because the government appropriated a right to invade, compensation was due.”

Distinction of PruneYard Opinion

Next, the Opinion turned to the Supreme Court decision in PruneYard Shopping Center v. Robins, where the Court applied Penn Central to a regulation allowing people to engage in leafletting at a privately-owned shopping center.  The CALRB and the dissent argue that this case shows that limiting rights to private property should be analyzed under Penn Central rather than a per se taking. The majority disagreed, drawing the distinction that the shopping center in PruneYard was open to the public, while the growers’ properties were not.

Discussion of Appropriation versus Regulation

The dissent argues that the law does not actually appropriate anything, but merely regulates the owners’ right to exclude. Because of this, the dissent believes, it should be analyzed under the Penn Central balancing test.  The majority disagrees.  “We cannot agree that the right to exclude is an empty formality, subject to modification at the government’s pleasure.  On the contrary, it is a fundamental element of the property right that cannot be balanced away.”

Discussion of Potential Broader Impact

Both the CALRB and the dissent warn that treating the access regulation as a per se taking will endanger a number of state and federal regulations allowing government entry onto private property.  The majority believes this fear is unfounded for three reasons.

First, this holding does not change the distinction between trespass and takings.  “Isolated physical invasions, not undertaken pursuant to a granted right of access, are properly assessed as individual torts rather than appropriations of property.”

Second, many government-authorized physical invasions do not constitute a taking because they are consistent with “longstanding background restrictions on property rights.”  For example, it is not a taking for the government to require a landowner to abate a nuisance, because he had no right to engage in a nuisance in the first place.  Similarly, a taking would not occur if entrance were allowed for public or private necessity or to effect an arrest or enforce criminal law under certain circumstances.

Third, a taking would not occur if the government required property owners to concede a right of access as a condition of obtaining a certain benefit.  Thus, government health and safety inspection regimes would generally not constitute a taking.  If the government conditions a grant of a permit, license, or regulation on allowing access for reasonable health and safety inspections, a taking likely would not occur.

In summary, “None of these considerations undermine our determination that the access regulation here gives rise to a per se physical taking.  Unlike a mere trespass, the regulation grants a formal entitlement to physically invade the growers’ land.  Unlike a law enforcement search, no traditional background principle of property law requires the growers to admit union organizers onto their premises.  And unlike standard health and safety inspections, the access regulation is not germane to any benefit provided to agricultural employers or any risk posed to the public.  The access regulation amounts to a simple appropriation of private property.”

Conclusion

Thus, the access regulation constitutes a per se physical taking.  The Court reversed the Ninth Circuit opinion and remanded for further proceedings.

Kavanaugh Concurrence

Justice Kavanaugh wrote separately to explain why he believes the Court’s opinion in NLRB v. Babcock & Wilcox also further supports the majority opinion.  In particular, Justice Kavanaugh explains that case held that union organizers could access property only when it was “needed,” meaning when the employees live on company property and the organizers have no other way to communicate with employees.  Because there was no such “need” here, the access regulation constituted a taking.

Dissenting Opinion

Justice Breyer wrote a dissent, which was joined by Justices Sotomayor and Kagan.  The dissent’s focus is on the question of how this takings claim should be analyzed–as a per se physical taking or as a Penn Central regulatory taking.  If the former, there is no need to look further and compensation must be paid.  If the later, “there is every need to look further” and payment is required only if the regulation “goes too far.” Justice Breyer believes the access regulation is not a per se taking and should be analyzed under Penn Central.

First, Justice Breyer states that the access regulation does not appropriate anything, but merely regulates the growers’ right to exclude. The access granted is not any traditional property interest in land as it does not grant the union organizers any traditional property interest in the estate such as fee simple or an easement.

Second, he explains that prior cases distinguish between regulations that provide a permanent right of access (per se takings) and those that provide nonpermanent rights of access (Penn Central). Here, he reasons, the access regulation is not permanent.  There is no fixed structure, the growers are not forever denied the power to control the use of their property, and it does not allow permanent access to the union organizers.  This case, the dissent believes, is more akin to PruneYard, as that involved a regulation allowing people to access private property to speak to others subject to reasonable time, place, and manner restrictions.  The majority points out the distinction between a shopping center opened to the public and agricultural operations that are not, but the dissent says those are things for a balancing test to consider.

Third, he addresses the number of ordinary regulations that permit entry onto a person’s property.  These include food product examination to preschool license requirement inspections, and a host of other examples included in the dissenting opinion.  The dissent believes that the majority’s attempt to address this by creating three exceptions to the takings rule–isolated physical takings are private torts, government access consistent with longstanding background restrictions are not a taking, and entry conditioned on a benefit is not a taking–will only result in more complexity and confusion.  The dissent criticizes each exception, pointing out unanswered questions.  For example, what constitutes “isolated?” Once a week?  Once a month? Where is the line between taking and trespass?

Lastly, the dissent points out that the takings clause prohibits the government from taking private property without just compensation.  Here, the growers did not seek compensation–indeed, they did not allege any damages–but instead, sought injunctive relief.  Justice Breyer notes that on remand, California should have the ability to avoid injunctive relief by providing compensation.

Key Takeaways 

First, this case illustrates the importance of categorizing any takings claim as either a per se physical taking or a Penn Central taking.  That is really what this entire fight is over.  The reason it is so important is that it is much easier for a plaintiff to prevail on a case if it can convince the court it is as per se taking.  Here, both the majority and dissenting opinions said as much.  If it is a physical invasion, compensation is owed, period.  If it is not and the Penn Central balancing test comes into play, things are much more complicated for a plaintiff.  To hear more about regulatory takings law, check out this prior podcast episode I did with Jesse Richardson.

Second, it will be really interesting to see the result of this opinion on other access regulations.  Certainly the majority tried to ensure the holding was limited by listing the three exceptions, but as the dissent pointed out, none of those exceptions are perfectly clear, bright-line rules.  Will this result in a flood of additional litigation that will require lower courts to flesh out what the limits of this case will be?  I think that may be likely.

Third, as the dissent points out, the remedy on remand is a really interesting issue here.  The fact that the regulation is a taking does not mean that it is illegal and must be stricken, it means that if that access is going to be granted, just compensation must be paid.  Here, the plaintiffs sought an injunction preventing the regulation from being enforced.  Will California seek to continue allowing access and come up with a mechanism for paying compensation?  If so, how would the compensation owed be calculated?  Who would have the burden of proving just compensation? Would the CALRB or the union organizers pay the cost?  Lots of interesting questions to be answered there.

Finally, this case certainly does stand for the proposition that the loss of the right to exclude someone from one’s property, even if not 7 days a week, 365 days a  year, is a fundamental property right falling under the per se line of cases are requiring just compensation be made.

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