Closed for Business – Open for Litigation?

Closed for Business – Open for Litigation?

Can a business-closure regulation of commercial property in a pandemic be a taking? 

In the midst of a pandemic, it generally falls to government to enact laws and regulations in an effort to curtail the spread of disease. For example, the Supreme Court discusses compulsory vaccination in Jacobson v. Massachusetts and quarantines in Smith v. Turner.  In a liberty-oriented constitutional federalist democratic republic like America, this can be challenging–indeed, the volume of published opinions in this area of law show how contentious such health-focused regulations can be when they touch on fundamental rights like bodily integrity, freedom of movement, or property. Our history, our culture, and our Constitution all reflect our heritage of preferring freedom to tyranny. In particular, our nation is founded on the existence and protection of private property. Our property system is, in turn, predicated on the “use” of property. However, private property rights, as with all liberties, are not absolute. Property is regulated by the law, and in many ways, our system is a balancing act between private and public interests.

Thus, whenever the government regulates property use, the question arises whether that action is a legitimate regulation of property for the public good, or whether it “goes too far” and constitutes a “taking” of some property interest. A taking, as classically formulated, is the appropriation of some property interest for the public use. But over-regulation of property can also be a taking. A taking is entirely permissible under our constitutional system so long as the public (through the government) pays “just compensation.”

This is true in good times. And in bad. And right now qualifies as bad.

So, when a government regulates your ability to use your property during a pandemic by forcing the doors of your business to close to the public, can that be a taking?

Yes. But it probably isn’t. But it might be. . .

First, it must be recognized that the Constitution exists even in an emergency. The Constitution expressly permits some alterations to our ordinary system of rights during times of war—for example, the Third Amendment provides differing provisions for the quartering of soldiers in times of peace versus times of war—but those alterations are baked into the system, the Constitution does not disappear in war. And a pandemic is not even a war. At common law, a pandemic qualifies as a time of great public peril. It’s an emergency, but it’s not a war. Thus, the body of law governing causalities of war is not directly on point. Instead, as explained by Chief Justice Hughes in Home Bldg. & Loan Ass’n v. Blaisdell, “While emergency does not create power, emergency may furnish the occasion for the exercise of power.” That is, during an emergency the use of a particular government power may be viewed and analyzed through the lens of the emergency.

In assessing whether a government regulation “goes too far” and becomes a taking of property, Penn Central sets forth a number of non-exclusive factors for consideration by courts. Among these factors is the “character” of the government action. Here, the character will generally be regulations temporarily inhibiting (or completely stopping) ordinary economic use of commercial property for the purpose of preserving actual public health. These measures are designed to be temporary, which will generally militate against liability for a taking. Likewise, the public health has long been recognized as the highest public interest: salus populi suprema lex esto.

Finally, the current regulations closing businesses are generally blanket in nature. No one person or specific class is singled out to shoulder the burden of preventing the spread of the pandemic. One purpose of the just compensation provision of the takings clause is to prevent a private person from bearing a cost to facilitate the public good when that burden should in all fairness be borne by the public. Where the law is of general applicability and burdens all (or most) landowners and property users, it is difficult to see how one (or few) private parties are being unfairly burdened for the public benefit. This parallels to broader jurisprudence analyzing the validity of quarantine regulations to prevent the spread of disease. For example, in  Jew Ho v. Williamson that court invalidated quarantine provisions as running afoul of 14th Amendment and as contrary to laws limiting police power when specific quarantine discriminated against one class of persons. This indicates that the broad spread of the pain in business-closure regulation likewise militates against finding a taking. Thus, launching a successful regulatory taking claim in the time of a pandemic seems a daunting task.

I will note a few counterpoints. First, if the government directly acquires property–even during an emergency and even for emergency purposes–compensation is almost assuredly owed under the Constitution and under our common law heritage. Secondly, the Constitution does not exist in a vacuum. The Supreme Court has said repeatedly that there are some contexts in which compensation for losses caused by government action is desirable, or even morally required, even if it does not fit squarely within the mandate of the Fifth Amendment. Finally, the Fifth Amendment is not the end of the inquiry in each state. As the laboratories of democracy, many state constitutions differ from the federal Constitution on when compensation is required–and these variations can only be more protective of private property rights.

On the whole, in synthesizing the general vibe of Penn Central, Blaisdell, Armstrong and the long line of emergency and quarantine cases, it seems fair to say that courts will likely give great deference to the government’s actions that impact land use and property values but do not require just compensation particularly when they are temporary (even if indefinite in duration), are of general applicability, do not confiscate title or permit possession by other people, and are legitimately for the supreme public purpose of directly saving human life. However, even in this time of great public peril, there are no additional privileges or powers created by an emergency. So, the government may (and some certainly will) go too far, resulting in compensable takings of property.

Steven M. Silva is an instructor of Property Law at Truckee Meadows Committee College in Reno, Nevada and a partner at Blanchard, Krasner & French, APC practicing extensively in eminent domain litigation in Nevada and California representing both government entities and landowners. He also served as a staff attorney at the Nevada Supreme Court.

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