U.S. Supreme Court Must Draw Difficult Lines in California Property Rights Dispute

Kelley Drye Client Advisory

On Monday, March 22, 2021, the Supreme Court heard oral argument in Cedar Point Nursery v. Hassid, a significant takings case. In Cedar Point, the U.S. Court of Appeals for the Ninth Circuit ruled that a nearly half-century-old California law that compels agricultural businesses to give union organizers access to their property for three hours per day, 120 days per year did not create a per se taking requiring compensation under the Takings Clause of the Fifth Amendment. The state mandated union-organizer access so that the organizers could try to persuade the growers’ farmworkers to join their unions. If California prevails states would have broad power to authorize extensive uncompensated physical invasions of private property.

The Ninth Circuit held that no taking occurred because California’s regulations did not require owners to give union organizers the right to unpredictably traverse their property 24 hours a day, 365 days a year.” Instead, they are only allowed to access the property at specified times, amounting to 360 hours a year out of a total 8,760 hours (and only 120 of those hours would be during the workday).” Thus, the panel reasoned, there is no permanent physical occupation” of property, of the sort required for the regulation to be deemed an automatic taking, rather than one subject to the complex Penn Central balancing test, which usually comes out in favor of the government. Eight Ninth Circuit justices joined a strong opinion dissenting from the Ninth Circuit’s refusal to rehear the case en banc.

The issue before the High Court comes down to whether a permanent physical occupation” occurs only when it is literally continuous, or when the right to occupy continues indefinitely, but does not apply to all hours of the day, all the time. Supreme Court precedent on this subject—like on a number of other takings issues—is no model of clarity.

The right to exclude unwanted entrants is an irreducible core attribute of property rights in the Anglo-American legal tradition. Thus, Blackstone’s Commentaries on the Laws of England:

​There is nothing which so generally strikes the imagination, engages the affections of mankind, as the right of property; or that sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe.

The U.S. Supreme Court has said of the right to exclude that it is universally held to be a fundamental element of the property right;” that it is one of the most essential rights” of property; and that it is one of the most treasured rights of property.” Kaiser Aetna v. United States, 444 U.S. 164, 179-180 (1979); Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982). Yet, in certain circumstances, the Court has held that interference with the right to exclude does not constitute a taking. For example, the Court has upheld a constitutional rule prohibiting owners of shopping centers from excluding individuals who seek to exercise free speech rights on shopping center property. See PruneYard Shopping Ctr. v. Robins, 447 U.S. 74 (1980). However, it explained this result on the ground that the owner had no exhibited an interest in excluding all persons from its property.” Loretto, 458 U.S. at 434. In other words, the Court would appear to regard such regulation as mediating a conflict over the use of the property that arises between the owner and the entrant after the owner has agreed to waive the right to exclude.

Based on oral argument, however, a majority of the justices appear inclined to vote against the state. Several justices noted that, under the approach advocated by the Ninth Circuit and by the state of California, any access requirement that lasts less than 365 days per year or does not cover all daylight hours would not be a per se taking—no matter the purpose of the government policy or the amount of disruption created.

Justice Clarence Thomas pointed out that California’s position would allow the state to mandate regular access to private property for police or National Guard units that wanted to use it to hold training exercises. Justice Amy Coney Barrett asked the following trenchant question:

Let’s imagine that [my house is] situated on the corner of two busy streets and a city decides that it would be beneficial to allow people to protest on my lawn because it’s so highly visible to the traffic that’s passing by.

But exactly like this one, you know, it says you can do it 120 days a year and three hours at a time just during rush hour. I take it, under your theory, that’s not a per se taking, that would be subject to Penn Central.

In response, California’s Solicitor General admitted that it would not be a per se taking, and that the complicated Penn Central balancing test would apply instead. He even conceded it would be a powerful” Penn Central case. But as Justice Barrett pointed out, Penn Central is deliberately designed to be very permissive towards regulations, given the pervasiveness of regulations on property use in modern life. And so it’s stacked in favor of regulations.”

Even Justices Breyer, Sotomayor, and Kagan—who are generally less sympathetic to property rights than their conservative colleagues—were highly critical of California’s Solicitor General for failing to provide a clear standard for when recurring, but not literally continuous, physical invasions of property qualify as takings.

Counsel for the property owners faced some tough questions of his own. The biggest problem for the property owners, raised by a number of justices, including Chief Justice Roberts, was that, if Cedar Point wins, recurring government health and safety inspections of businesses might also qualify as takings. Counsel tried to reassure the Court that such concerns were unwarranted: Under Anglo-American common law, property owners have no right to exclude reasonable” government inspections and searches. However, inspections meant to protect health and safety fall within the police power, and such uses of the police power typically are not treated as takings under the original meaning of the Takings Clause and later precedent. By contrast, a general right of union organizers to enter property does not fall under the police power protection, and neither does Justice Thomas’ example of mandated access for police and National Guard training.

Justice Brett Kavanaugh suggested that the court could avoid difficult questions about line-drawing and reasonable searches and instead arrive at a very simple” resolution to the case that would result in a win for the businesses. In NRLB v. Babcock & Wilcox, 351 U.S. 105 (1956), Justice Kavanaugh observed, the Supreme Court ruled that an employer’s right to exclude union organizers from its property must yield when employees would be otherwise unreachable through normal channels.

Many Court observers are predicting a narrow victory for the property owners. What remains unclear is what rule the Court will adopt for these types of cases, particularly on the question of how to distinguish the California union-access law from health and safety inspections, or whether it will take the simpler way out suggested by Justice Kavanaugh.