Deep Dive Episode 187 – Courthouse Steps Decision: Cedar Point Nursery v. Hassid

The Supreme Court issued its decision in Cedar Point Nursery v. Hassid on June 23, 2021, holding 6-3 that a California regulation allowing California union organizers entry onto the private property of California growers constituted an uncompensated per se physical taking in violation of the Fifth and Fourteenth Amendments. The Ninth Circuit’s decision upholding the regulation was reversed and the case was remanded.

In this episode, attorney Wen Fa analyzes the decision and its implications.

Transcript

Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.

[Music]

 

Guy DeSanctis:  Welcome to The Federalist Society’s Teleforum conference call. This afternoon, June 23, we discuss Courthouse Steps Decisions: Cedar Point Nursery v. Hassid. My name is Guy DeSanctis and I’m Assistant Director of Practice Groups at The Federalist Society. As always, please note that all expressions of opinion are those of the expert on today’s call.

 

Today, we are fortunate to have with us, Wen Fa, Attorney, Pacific Legal Foundation. After our speaker gives his opening remarks, we will turn to you, the audience for questions. So, be thinking of those as we go along and have them in mind for when we get to that portion of the call. With that, thank you for being with us today. Wen, the floor is yours.

 

Wen Fa:  All right. Thank you so much. It’s great to be back on and fortunately, we have some very positive news to announce. Earlier this morning, the Supreme Court of the United States handed down what I believe to be one of the biggest cases this term and one of the biggest property rights cases of the last decade, and that is its decision in Cedar Point Nursery v. Hassid.

 

In this case, I am very pleased to be working on the litigation team with my colleagues, Joshua Thompson, who argued the case, and Chris Kieser and Damien Schiff. We represent two California growers at Cedar Point Nursery, a grower in Northern California that plants strawberry plants, and also Fowler Packing Company, a business in Fresno that specializes in Mandarin oranges and table grapes.

 

The challenge in this case actually started in February 2016 when we launched this case in the U.S. District Court for the Eastern District of California. We challenged an access regulation – California access regulation – that allowed labor organizations and allowed union organizers the ability to go on the private property of every agricultural business in California for three hours per day and 120 days per year.

 

And this was applied to our clients in some very egregious ways. So, for example, Cedar Point — during a busy harvest season in 2015, union organizers came unannounced at 5:30 in the morning, worked their way through the trim sheds with bull horns, and actually intimidated and scared many of the workers during peak harvest season in 2015.

 

So, we challenged this regulation as a taking under the Fifth Amendment to the United States Constitution. And the central question in this case, and what makes this case so important, is whether this taking is a, per se, physical taking or a regulatory taking. And that question is really critical because a physical taking invokes a categorical rule in which the government is obligated to pay just compensation. And we didn’t even allege a regulatory taking multi-factor — we didn’t even allege a regulatory taking claim because, under a multi-factor balancing framework, in regulatory-taking cases, the government can literally take millions of dollars in value — the private property owner of millions of dollars in value and not even have to provide a penny in just compensation.

 

So, our claims were actually rejected at the district court and then again at the Ninth Circuit Court of Appeals. Both of those courts held that this is a regulatory taking subject to a multi-factor balancing test, and since we did not plead that it was a regulatory taking, our case had to be dismissed.

 

Now, the panel decision in the Ninth Circuit actually involved a defense arguing that we should have a chance to prove our claims, and we petitioned for rehearing en banc. And what the en banc panel — the en banc panel, although we had declined to re-hear this case en banc, garnered a very positive opinion that sent from denial en banc which was authored by Judge Ikuta and joined by seven different — seven other judges in the Ninth Circuit which said that  this is subject to the categorical and should be given per se analysis.

 

So, we then petitioned to the Supreme Court, it was granted — the petition was granted in November of last year, and my colleague, Joshua Thompson, as I mentioned, argued this case in March. The Supreme Court decision this morning was very favorable, adopted many of the arguments that we raised in our brief. And it held that a physical taking — or, actually, a regulation that involves physical occupation — a physical invasion of private property — and a regulation that really limits the property owner’s right to exclude amounts to a physical taking under the Fifth Amendment.

 

This was, as we argued, backed by decades of Supreme Court precedent going back to cases like Port Smith Harbor which involved a government firing of cannons over private property and all the way up to Nollan v. California Coastal Commission now, which was actually PLS — you know, this was PLS’s thirteenth win before the Supreme Court of the United States. Nollan v. California Coastal Commission was the first PLS win before the Supreme Court of the United States in 1987.

 

And in that case, the Court held that a California demand that private property owners essentially give up an easement on their private property in order to be able to rebuild their beachfront property was an unconstitutional condition. And included in that analysis was the fact that if the government had just taken that easement outright, it would have been a per se physical taking subject to the just compensation requirement.

 

So, the government — or, actually, I should say the Ninth Circuit’s reasoning in saying that this was a regulatory taking was sort of odd in that it said — it distinguished Nollan on the ground that Nollan allowed for 24/7, 365 access and, in this case, the access is limited to three hours per day, 120 days per year.

 

But as the Supreme Court pointed out in today’s opinion, the facts of Nollan — the beach was not even accessible 365 per year in Nollan and even if it had, the takings clause is not so feeble to where the government can just avoid its duty to pay just compensation just by limiting access to, say, 364 days per year, or 23 days. In other words — sorry, 23 hours out of each day. And I think the Ninth Circuit’s rationale in this case, in the opinion below, was so extreme that even the government — the California ALRB — abandoned that position in its response brief.

 

It said that this is a regulatory taking but it didn’t necessarily argue that a physical occupation had to be 365 days out of the year, 24/7 in order to be a physical taking. But it also did not draw a line for determining what would be a regulatory taking, what would be a physical taking in its response brief. The Supreme Court opinion today also distinguished Pruneyard which is a case that was — the primary case relied upon by the government below. And in Pruneyard, the — it distinguished Pruneyard on the grounds that — in Pruneyard the property there was a shopping center that was open to the public at-large. So, you did not have the same right to exclude. In fact, the property owner in Pruneyard did not typically limit its property or exercise its right to exclude against anybody.

 

In this case, these are private businesses. They’re only open to the workers on that — on business grounds. So, the right to exclude is much, much stronger in that case. And I think there’s a world of difference between this type of property and the sort of public place of public accommodation that was at issue in Pruneyard. So, I think the Court correctly addressed the Pruneyard — or, the Court correctly distinguished the Pruneyard decision.

 

There is also the decision in NRB v. Babcock and Wilcox, which sort of did a balancing analysis between the private property rights of businesses and also a union’s right to — or, I guess, the worker’s right to learn of union — the right to join a union. And the Court correctly distinguished Babcock on grounds that Babcock involved — was a case involving statutory interpretation. It didn’t involve a takings claim. It didn’t say anything about the takings issue that had been presented. And I think it was Judge Kavanaugh noted, in this case, we would have won even under the Babcock approach because the employer — the employees, I should say, at both Cedar Point Nursery and Fowler Packing are accessible offsite to union organizers. In fact, union organizers attempted and did — were able to speak to a lot of the employees offsite.

 

So, it – correctly — the Court also correctly dealt with Babcock. And in line with those two decisions, Pruneyard and Babcock, the Court turned to a, sort of, parade of horribles that were raised by the dissent and also by the government at the merit stage. We don’t think there’s much merit to those parade of horribles. We invoked several avenues for distinguishing them, and the Court adopted all of them.

 

So, for example, there are background principles of property rights. So, if one did not have a background principle — one did not have the right to exclude certain others — for example, government inspectors — at common law, then that right to exclude is not a part of a property owner’s property interest.

 

But here, you know, there was no common law analogue to union organizers being able to access private property for their private purposes for three hours per day, 120 days per year. And so the Court correctly recognized that this regulation impinged on the property rights common law — or sorry — the property owner’s common law right to exclude unwanted third parties.

 

It also addressed many of the inspection cases by using the Fourth Amendment. Because a property owner traditionally had no right to exclude an official that was actually engaged in a reasonable search — government searches that are consistent with the Fourth Amendment intuitively cannot be said to take any property rights from landowners.

 

There are other ways for distinguishing many of the examples raised by respondents and their amici. I won’t go through all of them, but notable — one other notable one that was raised by the Chamber of Commerce amicus brief authored by former Judge Michael McConnell was that — there is a long line of cases holding that when the government conditions the grant of a benefit, such as a permit, on allowing access for reasonable health and safety inspections, that might be constitutional — as a constitutional condition as long as it meets the nexus and rough proportionality requirements enunciated by the Supreme Court in cases like Nollan and Dolan.

 

So, the Chief’s majority opinion for the Court was joined by Justices Kavanaugh, Gorsuch, Alito, Thomas, and Barrett. Judge Kavanaugh also wrote a separate opinion saying what I — pretty much what I said earlier — that there was another avenue for plaintiffs to win in this case which was that the — that under the balancing test established by Babcock, we would win under that test, as well.

 

But I think the primary reason we won is by applying the per se physical takings analysis. Justice Breyer authored a dissenting opinion joined by Justices Sotomayor and Kagan in which Justice Breyer stated his view that this should be considered under the multi-factor balancing test of consensual. But one interesting part about Justice Breyer’s opinion that I noticed was — I think he views — he called the Penn Central balancing test flexible, and views that as a feature and not a bug. But on the ground practices, a lot of property attorneys know, the multi-factor balancing test under Penn Central is notoriously unfavorable for property owners.

 

I’ve seen cases where a property owner lost 95 percent of value and did not receive a penny in compensation. So that’s just another reason why this is such a big case for property rights and property owners across the United States in that it establishes that the per se physical taking doctrine applies and the government has a duty to compensate the property owner for any taking of property that’s analogous to the taking in this case.

 

So, the upshot of this case — I think there is a lot to be litigated in future cases, but it is a very big case for property rights and it’s a big win for liberty. I think this is one of the biggest wins for individual liberty this term. Property rights is obviously central to the notion of individual liberty in the United States and this case vindicates important property rights.

 

And with that, I will open it up for questions.

 

Guy DeSanctis:  Thank you for that. We’ll now go to audience questions. While we wait for our first question, is there anything else — oh, never mind, we have our first question now.

 

Josh Baker:  Good afternoon. Josh Baker in Norfolk, Virginia.

 

I was curious about whether you think the court would have ruled differently if there had not been a prior physical entry onto the property at issue. Meaning, would the Court have gotten to the same conclusion if — as you kind of read the opinion that talked about the right that was conferred on the unions — but if they hadn’t actually exercised that right in the past, do you think we’d get to a different result?

 

Wen Fa:  Yeah. That’s a very interesting question. You know, I — and I think it’s a difficult question. I think it does make a difference here that this is a regulation that has been on the books for decades and the union organizers in this case actually did enter the private property of Cedar Point and also attempted to access the private property of Fowler Packing Company.

 

You know, I think that if there were a new regulation and a property owner would be entitled to file a lawsuit alleging that — if it’s clear that the regulation takes away the property owner’s right to exclude, I feel like it would be proper for the property owner to file a case right away even before the physical invasion happens. But I think, as your question noted, that is a very — that is a more difficult case. And in this case, this is a regulation that has been on the books for decades, and access was actually taken against Cedar Point and was — attempted access was taken against both of our clients.

 

Guy DeSanctis:  Thank you for that.

 

Wen Fa:  Thank you. And before we get to the next question, I also wanted to add — I forgot to mention this during the original talk, but I did want to give a lot of thanks to the amicus briefs that were filed in support of the petitioners in this case. There are much too many to name, but there were ones filed by the Mountain States Legal Foundation, by the California Farm Bureau, by a group of 11 states led by Oklahoma, and many others including the U.S. Chamber.

 

So, I did want to give a shout out to the people who filed in support of our brief both at the merit and the petition stage. I think they really — I’ve read all of them, they all raised very unique and thoughtful arguments, and I think the Court’s opinion was shaped by many of those arguments.

 

Guy DeSanctis:  Thank you. Next question.

 

Caller 2:  Thanks so much for that summary. I was curious if you could maybe shed light on what kinds of further government regulatory actions you expect this decision to help PLF or others push back on looking ahead in terms of how this helps limit future government assertions of authority or limitations on private property rights.

 

Wen Fa:  Yeah. Certainly — that is certainly a very interesting question. It would be — I would say laws that are analogous to the access regulation would be analyzed under the physical per se taking rubric. So, if there are other laws — I haven’t really done a survey of all of the other similar laws on the books, but laws that do allow for, say, third-party organizations to come onto the private property of property owners without the property owner’s consent — I think the key point that the decision today establishes is that even if the occupation itself or the right to occupation itself is not the 365, 24/7 it could still take away a property owner’s right to exclude in a meaningful way and would still be subject to the per se takings analysis.

 

Guy DeSanctis:  Thank you for that question and answer. In the meantime, is there anything else you’d like to discuss while we wait for another question?

 

Wen Fa:  Yeah. Well, I think one other thing I wanted to add was in this case, like in many of our cases, I feel like our clients are the heroes in the story. You know, as attorneys, we make the legal arguments, we engage in briefing, but the clients are really the people who are affected by these laws and they can tell their stories about how it affects their right to earn a living, and they’re the ones who are brave enough — because most Americans, I think, actually don’t get involved with lawsuits — our clients are brave enough to stand up for their constitutional rights.

 

You know, we’ve suffered many losses, like I just said, on the way. Our claims were rejected at the district court, it was rejected at the circuit court, our petition for rehearing en banc was denied. So, I think it just speaks to the relentlessness and confidence of our clients, and also my colleagues share in the Pacific Legal Foundation, that we were able to stick this out for almost six years and suffered several losses along the way. But we were confident that — the arc of justice was long but it bends towards liberty. And I’m happy to finally be able to announce that we got a favorable decision today.

 

Guy DeSanctis:  Thank you. Yeah. It seems at this time that we don’t have any more questions. So, if there’s anything else you’d like to say to close after that? Or if you’re ready to wrap things up? Either way.

 

Wen Fa:  Yeah. I mean, again, I just want to emphasize that this is such a big case for liberty. We’re very pleased with the Court’s decision and the Court’s emphasis on the importance of private property rights and the right to exclude. And, obviously, beyond property rights, Pacific Legal Foundation also litigates cases involving separation of powers, equality before the law, economic liberty and free speech. And we’re looking forward to continuing our pursuit for individual liberty in all those areas.

 

Guy DeSanctis:  Thank you. Well, on behalf of The Federalist Society, I want to thank our expert, Wen Fa, for the benefit of his valuable time and expertise today. And I want to thank our audience for calling in and participating.

 

We welcome listener feedback by email at info@fed-soc.org. As always, keep an eye on our website and your e-mails for announcements about upcoming Teleforum calls and virtual events. Thank you all for joining us today. We are adjourned.

 

[Music]

Wen Fa

Attorney

Pacific Legal Foundation


Labor & Employment
State & Local

Federalist Society’s Environmental Law & Property Rights Practice Group

The Federalist Society and Regulatory Transparency Project take no position on particular legal or public policy matters. All expressions of opinion are those of the speaker(s). To join the debate, please email us at rtp@regproject.org.

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