Yet another case rejecting a takings claim for a Co-19 related business shut down.

In 640 Tenth, LP v. Newsom, No. D070339 (May 13, 2022) the court expressed sympathy for the property owners who have been required to shoulder more than their share of the burdens of these shutdowns.See slip op. at 2 (“We fully appreciate that the adverse effects of the present pandemic have not fallen equally on all segments of society, and that some small business owners are among those who have borne an especially heavy burden.”). But sympathy is all they get.

This case is another challenge to California’s emergency order prohibiting both indoor and outdoor dining at restaurants. The state adopted a plan for staged reopening, depending on the assessed risk for viral transmissions in each county, and these total-to-partial shut down orders stayed in place until June 2021, when the enabling executive order was rescinded.

The plaintiffs sued for (among other things) a taking. Skip to page 17 of the Court of Appeal’s slip opinion for the takings analysis. “The owners have not alleged a physical taking,” slip op. at 17, and therefore the court focused on the Penn Central factors. It concluded that the owners “have not alleged a legally sufficient regulatory taking claim.” Slip op. at 19. As we have noted, these type of claims have resulted in “a virtual torrent of California federal district court decisions rejecting similar challenges[.]” Id.

Here’s how the court evaluated the factors:

  • Economic impact: the plaintiffs’ allegation that they suffered “significant” loss is not enough. And their allegation that they were “threatened” with these losses also isn’t enough, “[a] regulatory taking requires actual severe economic loss, not merely threatened harm.” Slip op. at 21.
  • Investment-backed expectations: this factor favored the plaintiffs because although they were already subject to health regulations, “it is fair to say that almost everyone was expecting to conduct business as usual when 2019 transitioned to 2020,” and “the public health orders at issue here are different from the type of health restrictions typically imposed on restaurants.” Slip op. at 21.
  • Character of the government action: the character prong focuses on whether the government action involves a temporary physical occupation. But the plaintiffs here did not allege a physical invasion. The court noted that “there are other ways courts have approached the ‘character’ issue,” pointing out that some courts have balanced the advantages to the plaintiff resulting from the regulation, while others have asked whether the regulation is designed to prevent serious public harm. Slip op. at 22-23. The court concluded that this factor cut against the plaintiffs: “The character of these actions is akin to that of other historical examples of governmental actions undertaken to counter serious threats to the public that were subsequently found not to be takings.” Slip op. at 24.

In short, no taking.

640 Tenth, LP v. Newsom, No. D079339 (Cal. Ct. App. May 13, 2022)