A short one (unpublished) from the U.S. Court of Appeals for the Sixth Circuit, considering an issue we’ve been following: what is the effect of the government’s claim that it is regulating property for what looks like a valid “police power” purpose?

As noted, that’s a road we’ve been down before. Here’s a sampling:

In Bojicic v. Dewine, No. 21-4123 (Aug. 22, 2022), the Sixth Circuit was considering a takings and due process challenge to the governor’s Co-19 shutdown orders. The court rejected the district court’s rationale that the claim could be rejected simply because “the state acts pursuant to its police powers to protect public health.” Slip op. at 15.  

In support, the court cited United States v. Droganes, in which we held that seizure and retention of property under the police power is not a public use. 728 F.3d 580, 591 (6th Cir. 2013). But that case involved the government’s failure to return property the plaintiff had agreed to forfeit after being charged criminally. Id. at 585. It did not concern the kind of regulatory taking at issue here.

Defendants cite several other cases purportedly holding that exercises of the police power are not compensable takings. Principally, the Defendants rely on Keystone Bituminous Coal Association v. DeBenedictis, 480 U.S. 470 (1987), decided after Penn Central. That case discussed whether the government must compensate property owners when it prevented them using their property for certain purposes. The Court explained that “‘all property in this country is held under the implied obligation that the owner’s use of it shall not be injurious to the community,’ and the Takings Clause did not transform that principle to one that requires compensation whenever the State asserts its power to enforce it.” 480 U.S. at 491–92 (cleaned up) (quoting Mugler v. Kansas, 123 U.S. 623, 665 (1887)). And it added that “the public interest in preventing activities similar to public nuisances is a substantial one, which in many instances has not required compensation.” Id. at 492.

Slip op. at 15-16.

The appeals court acknowledged that yes, the state has a strong interest in preventing harm, but “no appellate court seems to have applied the police-power language so broadly as to categorically declare that no state response to a public-health emergency could be a taking. True, this police-power exception has been applied in the context of criminal forfeitures and abating nuisances. But to hold that a regulation intended to benefit public health can never be a compensable taking would be an unwarranted extension of existing precedent.” Slip op. at 16.

That’s something we argued in this article (“Evaluating Emergency Takings: Flattening the Economic Curve,” 29 Wm & Mary Bill of Rights J. 1145 (2021)). We view a valid police power reason as the predicate to a takings claim, and not a bar. After all, if the government lacks a valid health, safety, welfare, or morals reason supporting the restriction, that’s a due process problem (mostly). It’s only after a court makes that call that it can consider whether compensation might be owed.

So score one for the property owner!

But that was not the end of the story. Having rejected the district court’s rationale for dismissing, the Sixth Circuit didn’t stop there: “[w]e therefore analyze this issue under the Penn Central framework” since no Lucas economic wipeout was alleged by the plaintiff. Id.

And don’t miss the way the court analyzes the multi-factor test. First, it concluded that “[t]he first two factors—the economic impact of the regulation on the plaintiff and the extent to which the regulation had interfered with the plaintiff’s distinct investment-backed expectation—weigh in favor of the Plaintiffs.” Id. Oh boy, things are really looking up, no?

Not so fast. The court concluded that the final factor–the character of the government action–“weighs even more heavily in the Defendants’ favor.” Slip op. at 17. Indeed, the character is “dispositive.” Id. Why, you ask? It looks like the court went back and cut the police power argument, and paste it here. The character of the government action was that the state imposed the restrictions “to protect public health by reacting quickly in the face of a fast-spreading and novel virus.” Id. As we suggested in the article referenced above, the “character” inquiry is not just another way of asking whether the government has a good police power reason for the regulations. Character asks about the nature of the imposition on the plaintiff’s rights by asking does it require some surrender of a fundamental aspect of property, or is it more a rearrangement of the benefits and burdens of life? It’s not some kind of alternative police power test as the Sixth Circuit concluded. 

Next, the court held that the character of the state’s Co-19 restrictions here were temporary (“in effect for only a little over two months”). The court recognized that Tahoe-Sierra “analyzed a per se regulatory taking,” but also asserted “the language applies equally here.” Slip op. at 17. But again, what does that have to do with character? Aren’t temporary takings also compensable (we sure think so)?

The court, of course, expressed it’s “sympathy” for the plaintiffs because “they were forced to shut down their businesses, give up income, and endure the uncertain difficulties of the pandemic.” Slip op. at 18. But because the government was “facing the unexpected arrival of a virus of unknown destructive capacity,” it was “forced to act and to act quickly.” Slip op. at 18. Thus, no taking.

Bojicic v. Dewine, No 21-4123 (6th Cir Aug. 22, 2022) (unpub.)