Topic: Law and Civil Liberties

Of Raisins and Property Rights

Further to Ilya’s overview of today’s Supreme Court decision in Horne v. Dept. of Agriculture, it should be noted that it’s taken Marvin and Laura Horne over a decade to vindicate their rights in the raisins the government sought to take “for their benefit,” under one of the many economically foolish New Deal and later agricultural marketing schemes Congress has seen fit to enact. But in this lengthy process, the Hornes have helped the Court to settle a fundamental principle, namely, that the Fifth Amendment’s Takings Clause prohibits the government from taking both real and personal property for public use without just compensation.

At the same time, the Court is still confused in its effort to distinguish and adjudicate what have come to be called “physical” and “regulatory” takings. In Horne, the Court held, the government sought to “physically” take 47 percent of the Hornes’ raisins, much as ten years ago, in its infamous Kelo decision, the Court upheld the City of New London, Connecticut’s “physical” taking of Suzette’s Kelo’s little pink house. In other words, the government sought to take title to the Hornes’ property in their raisins.

By contrast, in a regulatory taking, the government, through regulation, takes certain otherwise legitimate uses an owner has in his property. The owner retains the title; but it’s usually a much devalued title. For almost a century, the Court has struggled to fit these regulatory takings under the Takings Clause—ever since Justice Holmes in 1922 wrote that a regulatory restriction that goes “too far” amounts to a taking requiring compensation. The three-part test the Court set forth in 1978 in its Penn Central decision only muddied those waters. In fact, we see that here when Chief Justice Roberts tries to drive home the point that in Horne we have a physical taking. In response to a point made by the dissent he writes that in such cases “‘we do not ask … whether [the taking] deprives the owner of all economically valuable use’ of the item taken”—citing one of the three Penn Central criteria.

Roberts is right: we don’t ask that when title is taken, as here. But in labeling Horne a “physical” taking, and distinguishing it from a taking that “‘deprives the owner of all economically valuable use’ of the item taken,” Roberts opens up a question: Just what does “the item” refer to? Clearly, Roberts means to refer to “the property” in the sense of the whole parcel or the underlying fee. But that is not “the item” that is taken in a regulatory taking. The owner still owns the fee. What is usually taken is certain “economically valuable uses”—but not all such uses. Indeed, in many regulatory cases the owner is entitled to compensation only when all the uses are taken. That was the case in the Court’s 1992 Lucas decision, where the regulatory restrictions left the owner with an effectively worthless title.

The nub of the matter here is really quite simple, and it was stated by James Madison in his famous 1792 essay, Property: “In a word, as a man is said to have a right to his property, he may be equally said to have a property in his rights.” In other words, it’s not simply the underlying fee that is our property. All the legitimate uses that go with it are our property as well. Thus, a taking occurs and compensation is due not simply when that last use is taken, which is what the Lucas Court effectively held, but when the first use is taken and the title is accordingly devalued. Those uses—those “items”—are our property too. Perhaps the Court will one day give us an integrated theory of property of a kind that Madison understood—before the rise of the modern regulatory state.

Patel: Right Result, Wan Rationale

Making short work of the idea that facial challenges aren’t available under the Fourth Amendment, the Supreme Court ruled today in Los Angeles v. Patel that a city may not require its hotels to turn over their business records without some opportunity for review of the government’s demands. It’s the right result, but the Court was too quiet about its treatment of Fourth Amendment doctrine, and it did not take the opportunity to fully address situations like the case presented, in which the government dragoons private businesses into surveillance on its behalf.

Justice Sotomayor, writing for a 5-4 majority, held: “the provision of the Los Angeles Municipal Code that requires hotel operators to make their registries available to the police on demand is facially unconstitutional because it penalizes them for declining to turn over their records without affording them any opportunity for pre-compliance review.” Justice Scalia led one bloc of dissenters believing it was reasonable to institute this kind of regulation on business owners suspected of no substantive crime because their facilities are sometimes used for crime. Justice Alito dissented as well, arguing that there should be no facial challenge to the statute because constitutional applications of it exist.

Had the stars lined up, the Court might have used the Patel case to address simmering issues around current Fourth Amendment doctrine, as the Cato Institute’s brief for the Court suggested. The Court indeed eschewed the backward “reasonable expectation of privacy” test, which finds that Fourth Amendment interest exists when people reasonably feel that it does. It instead examined whether the government’s scheme was reasonable, which is where the language of the Fourth Amendment focuses courts’ attention. But the Court did not broadcast the inapplicability of “reasonable expectation” doctrine, so most lawyers and lower courts will probably not realize that another in a growing line of cases is applying the Fourth Amendment in a new and better way, by hewing more closely to the text.

Part of the reason the Court didn’t take all the constitutional bait was the unusually narrow challenge the hoteliers brought. They attacked the collection of information by the government, granting for the sake of argument in this case that the government has the power to require them to collect information about their customers for the government’s later use. Had the Court considered the totality of what we called “the warrantless search scheme,” it would have had to assess whether it is reasonable in our constitutional system for private businesses to be dragooned into wholesale, comprehensive surveillance on behalf of the government. That scope might have brought the Court’s conservatives off the sidelines and into defending the degree of privacy against government that existed when the Fourth Amendment was adopted. (Surely, the government couldn’t have conscripted businesses into mass surveillance of the public at the time of the framing.)

Folks who are paying attention will recognize that the “reasonable expectation of privacy” test continues to recede in importance. We will continue to wait, though, for the case that clearly and articulately applies the right against unreasonable seizures and searches to information as such. While Patel is a technical win, some later case or cases will have to truly address how the Fourth Amendment is to be administered in the modern era.

The Government Has to Pay for the Raisins It Confiscates

The near-unanimous Supreme Court decided today in favor of the farmers whose raisins the federal government wanted to take as part of a cockamamie New Deal-era regulatory scheme. The Court ruled 8-1 in support of Cato’s position that taking personal property is a compensable action, regardless of whether the government purports to act on the property owner’s behalf, and 5-4 on the question of compensation for that taking. (This is two years after the Court ruled 9-0 that the Marvin and Laura Horne could have their day in court and raise their constitutional challenge, rather than being stuck in some byzantine administrative purgatory.)

Of course, it should be rather obvious that when the government takes your property, its actions are subject to the Fifth Amendment’s Takings Clause, which requires that such taking be (a) for a “public use” and (b) subject to the owner receiving “just compensation.” And it should be equally obvious that the Constitution doesn’t distinguish between real property (your house) and personal property (your car). Yet the government insisted here that, at least in the context of agricultural-marketing/price-setting programs, it can take your crops and do whatever it likes with them so long as it’s all hypothetically for your own benefit.

Chief Justice Roberts swatted away that contention. Here are the key paragraphs (pages 4-5 of the slip opinion):

There is no dispute that the “classic taking [is one] in which the government directly appropriates private prop­erty for its own use.” Nor is there any dispute that, in the case of real property, such an appropriation is a per se taking that requires just compensation.

Nothing in the text or history of the Takings Clause, or our precedents, suggests that the rule is any different when it comes to appropriation of personal property. The Government has a categorical duty to pay just compensa­tion when it takes your car, just as when it takes your home. (citations omitted)

There are some other nuggets in the opinion, including a riff on the government’s contention that raisin farmers, to avoid the Raisin Administrative Committee’s attentions, could simply sell wine: “ ‘Let them sell wine’ is probably not much more comfortable to the raisin growers than similar retorts have been to others throughout history.” Moreover, “[r]aisins are not like oysters: they are private property – the fruit of the growers’ labor – not “public things subject to the absolute control of the state.”

In any event, thus the Hornes’ multi-year fight against the U.S. Department of Agriculture ends in a definitive ruling that the USDA cannot assess them nearly half a million dollars for the value of the raisins they refused to relinquish (nor a $200,000 civil penalty that added insult to injury). Let’s not forget that this epochal battle involved two trips to the Supreme Court, where the government only got one of a possible 18 votes.

For more background on the case, see Trevor Burrus’s commentary when we filed our brief. For early reaction to the ruling, see Ilya Somin’s post at the Volokh Conspiracy.

The Patent & Trademark Office Has a Slanted View of the First Amendment

Yesterday’s Supreme Court ruling regarding Confederate-flag license plates isn’t the last word on First Amendment protection for “offensive” speech. Indeed, it doesn’t even resolve all the issues related to government-insinuated expression. One case working its way through the lower courts regarding a controversial trademark – but not this one! – illustrates some of the pitfalls inherent in allowing the government to act as censor, for whatever reason.

A musician named Simon Tam wanted to “take back” and “own” what had previously been used as an ethnic slur by calling his Asian-American rock band “The Slants.” The Patent and Trademark Office found that this trademark was disparaging to Asians, however, so refused to register it under § 2(a) of the Lanham Act. This provision says, among other things, that the PTO may refuse to register a trademark that “[c]onsists of … matter which may disparage … persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.”

This refusal to register the trademark was affirmed by a three-judge panel of the U.S. Court of Appeals for the Federal Circuit. But then the entire Federal Circuit—without being asked!—decided to erase that decision and consider whether § 2(a), or at least its application here, violates the First Amendment.

Supreme Court Allows Texas to Offend the First Amendment

Today a narrow and unusual Supreme Court majority ruled that the DMV – of all government agencies! – is allowed to censor speech it considers to be “offensive.” To wit, the four “liberal” justices and Justice Clarence Thomas somehow found that the specialty license plates Texas drivers can choose to have on their vehicles actually constitute state speech – and of course the state can control its own messages, including rejecting a plate proposed by the Texas branch of the Sons of Confederate Veterans. This is so even though the specialty-license-plate program encourages Texans to come up with their own designs and slogans, which has resulted in around 400 plates that express support for a plethora of nonprofit organizations, commercial entities, affinity groups, and myriad other causes.

By this logic, Texas has long been endorsing Dr. Pepper, ReMax, and an assortment of burger and taco joints. Indeed, both Longhorns (UT-Austin) and Aggies (Texas A&M) will be dismayed to learn that the Lone Star State cheers for the Sooners (University of Oklahoma) and Cowboys (Oklahoma State). Surely at least one person is “offended” by each of the above examples, yet the DMV has refused to act in the face of such (macro)aggression. As the dissenting justices point out, it’s even more bizarre that, under the majority’s reading, “rather be golfing” is official state policy. It’s a wonder that the state has become America’s engine of economic growth!

To add hypocrisy to insult, the author of today’s decision, Justice Stephen Breyer, contradicted his own writing in the key recent precedent, a case regarding monuments in a city park. In the 2009 case of Pleasant Grove City v. Summum, Breyer concurred in the Court’s opinion “on the understanding that the ‘government speech’ doctrine is a rule of thumb, not a rigid category. Were the City to discriminate in the selection of permanent monuments on grounds unrelated to the display’s theme, say solely on political grounds, its action might well violate the First Amendment.”

Indeed. The ruling in Walker v. Texas Division represents a fundamental misunderstanding of what’s going on here. Texas doesn’t have to have specialty license plates, but if it creates this money-making program, it can’t then censor speech it simply doesn’t like.

As Cato wrote in our amicus brief, one man’s offensive speech is another’s exercise of social commentary or personal expression. And unlike, say, child pornography and “fighting words,” “offensive” speech is protected by the First Amendment.

It’s the Supreme Court that has offended the freedom of speech today. And now we know that the First Amendment is one thing that’s smaller in Texas.

Airport Pirates Find Bounty in a College Student’s Life Savings

Today, our friends at the Institute for Justice launched a new challenge to yet another instance of egregious civil asset forfeiture abuse.

Charles Clarke is a 24-year-old college student who found out the hard way that government officials can confiscate property on the mere suspicion that it has a “substantial connection” to a crime or is the proceeds of a crime. No underlying conviction is required. Functionally, this means that officers can claim that “something was a little off” about your behavior, or that “something smells a little like drugs” and then have carte blanche to take whatever cash you have on you. After that, your cash is presumptively guilty, and it is up to you to prove its innocence.

In the winter of 2013, Charles was stopped at the Cincinnati/Northern Kentucky airport based on the officers’ assertion that his bag smelled like marijuana. Actually, it was based off of a drug dog’s “signal” that his bag smelled like marijuana. By claiming that a dog “alerted” an officer can obtain probable cause, but in reality the dogs are about as reliable as Clever Hans.

After searching his bag, the officers found no drugs or other illegal substances. They then asked him if he was carrying any cash. Charles volunteered that he was carrying $11,000–clearly thinking, not unreasonably, that in a just world there is no way the officers could just take his money. Charles’s mistake, however, was thinking that he lives in a just world, and the officers walked away with his life savings.

Charles had saved the $11,000 over the previous five years, from work, financial aid, educational benefits, and gifts from family. Now he must overcome the officers’ hunches by proving that his money came from legal sources.

House Leadership Blocks Key Intelligence Reforms

The House GOP leadership’s hostility to reforming the U.S. Intelligence Community is on full display this week. The House Rules Committee (which is controlled by House Speaker John Boehner) blocked several key reform amendments to the annual Intelligence Authorization bill from even reaching the House floor for consideration.

Furious over an op-ed by Privacy and Civil Liberties Board chairman David Medine that called for an independent review of the executive branch’s “assassination-by-drone” policy, House Intelligence Committee chairman Devin Nunes (R-CA) included language in the annual Intelligence Authorization bill banning the PCLOB from examining the “covert” drone program. A bipartisan amendment (led by Rep. Jim Himes of Connecticut) that would have struck that language was barred from consideration.

Last week, the House passed a bipartisan amendment to the annual Defense Department spending bill baring the federal government from using taxpayer dollars to search the stored communications of Americans collected by NSA. That same amendment would also prevent the federal government from mandating that American tech companies build encryption-defeating “back doors” into their products. The authors of that amendment, Democrat Zoe Lofgren of California and Republican Thomas Massie of Kentucky, wanted to make those provisions permanent, but their amendment was also blocked.