Missed Opportunities in State Takings Challenges to Pandemic-Era Restrictions

Responding to the Covid-19 pandemic, the federal government and many state and local governments imposed a variety of restrictions on individuals and businesses. The Centers for Disease Control and Prevention, for example, purported to suspend the ability of property owners to evict nonpaying tenants — a move the U.S. Supreme Court rejected as beyond the agency’s power. State and local governments adopted similar eviction moratoria, and many directed businesses to close or curtail operations. Litigation followed.

Much of that litigation focused on the federal Fifth Amendment’s requirement that the government provide just compensation when it takes private property for public use. Property and business owners have generally been unsuccessful in pressing federal takings claims for Covid-19 restrictions. But it is established that the rights acknowledged by the U.S. Constitution are merely a floor, not a ceiling. This notion recognizes that states may freely offer a higher level of protection of rights under their own laws or more severely restrict the state’s powers (or both). And many state constitutions go further, guaranteeing compensation when property is damaged. 

This month, the Michigan Supreme Court heard oral arguments in two cases that present it with the opportunity to confirm that the Michigan Takings Clause recognizes greater protections than its federal counterpart — an opportunity it should take. The cases were brought against the state by fitness centers and restaurants forced to close without compensation for six months during the pandemic. In both cases, applying federal takings law, the lower courts held that there had been no taking because the property owners failed to meet the opaque three-factor Penn Central Transportation Company v. New York City standard, which the U.S. Supreme Court identifies as the default test in federal regulatory takings. The plaintiffs, who brought both state and federal constitutional claims, argued that their claims should move forward under the state constitution “even if a taking has not been found to have existed under U.S. Supreme Court precedent.” In prior cases, the Michigan court has acknowledged that the state constitution recognizes greater protections for private property than its federal constitutional counterpart.

The Takings Clause of the Washington State Constitution is similar to Michigan’s. Consequently, one might think that the Washington Supreme Court would have a more protective and rights-based view than the U.S. Constitution’s minimums. But alas, no. Two cases decided by the court involving challenges to pandemic response measures illustrate the narrow and uninventive — and even rudderless — ways in which state courts can view their own constitutions.

The first is Washington Food Industry Association v. City of Seattle, where the court held that a takings challenge to a Seattle ordinance requiring pandemic “combat pay” for food delivery workers was properly pleaded, and that the lawsuit should be allowed to proceed. That was all well and good for the plaintiffs, grocery delivery company Instacart and a food industry association. It is also a welcome result for those who believe that property rights are not relegated to second-class status simply because Seattle was responding to an emergency.

But as much as the outcome is a good one, this case was a missed opportunity for the court to have breathed more vitality into the Washington Constitution’s protections of private property. Even though the plaintiff asserted takings claims under both the U.S. and Washington Constitutions, the opinion relied nearly exclusively on federal takings precedents — most notably, the U.S. Supreme Court’s Penn Central test. The court said it was “apply[ing] the same definition of a regulatory taking” under both constitutions, and it incorporated the U.S. Supreme Court’s takings standards wholesale. In other words, there’s no real difference between the Fifth Amendment and Article I, Section 16, of the Washington Constitution, even though the state Takings Clause contains distinctly broader language than its federal counterpart and is the product of an entirely separate history and ratification process.

It doesn’t have to be that way. For example, several other state high courts have taken the “floor, not a ceiling” principle to heart and charted their own courses when interpreting their state constitutions’ takings clauses. Supreme courts in Arizona, Louisiana, and Utah are three prominent examples of courts that apply their own standards when evaluating takings claims and, as a result, adopt a more expansive view of their state constitutions’ protections of property rights.

In the second Washington case, property owners challenged a pandemic-era statewide moratorium on evicting tenants. This time, the state supreme court took up the challenge and charted its own course. But unfortunately, it went in the wrong direction.

The law at issue in Gonzales v. Inslee allowed tenants who did not pay rent to remain in occupation for the length of the moratorium, which ultimately lasted 15 months. The plaintiffs brought a claim under the Washington Constitution’s Takings Clause, asserting that their inability to evict nonpaying tenants amounted to a state-sponsored physical occupation of their property. Notably, they did not raise a federal Fifth Amendment claim.

As in the Washington Food Industry case, the court purported to apply federal takings precedents as the means to interpret the Washington State Constitution. It concluded that the moratorium on evictions was merely the state regulating the voluntary relationship between an owner and tenant, and not — as the plaintiffs alleged — the state effectively commandeering rental units for free pandemic housing.

But the Washington Supreme Court got those federal precedents badly wrong, and as a result, its decision fell well below the “floor” established by the U.S. Constitution. In a footnote, the opinion revealed its Achilles’ heel: “We are not without sympathy to the fact that the petitioners have been made to bear the cost of accommodating a public need. We note that both Congress and the Washington State Legislature have appropriated significant funds to defray at least some of that cost in situations where the tenants have not paid rent and have avoided paying their debts.”

That’s a stunning statement because it recognizes that the moratorium impressed private rental units into public service as public housing to “accommodate[e] a public need” and, most importantly, that owners of rental property are being forced to bear the cost of that public accommodation, but without just compensation in return. In short, the Washington Supreme Court in Gonzales held that the Washington Constitution doesn’t require the distribution of the cost of public benefits to the entire public. 

But in Armstrong v. United States, the U.S. Supreme Court held that the most fundamental point of the Fifth Amendment’s Takings Clause is to ensure that the economic costs of public benefits are being fairly distributed to all who benefit, and not focused on owners who, for otherwise valid reasons, are forced to surrender their property for public use or benefit.

Whether these Washington decisions can be written off as byproducts of the exigencies of the pandemic emergency remains for the future. In any event, they represent a state court failing to recognize the potential of independent and freestanding protections of private property rights available under the state constitution. Let’s hope the Michigan Supreme Court does better and views the Michigan Constitution’s protections more expansively. 

Robert H. Thomas is the director of property rights litigation at Pacific Legal Foundation.