Temporary Takings

Let’s resume my series of blog posts on the takings clause in the coronavirus age. The one case to consider whether a coronavirus lockdown order constitutes a “taking” is the case of Friends of Danny DeVito v. Governor Wolf, available here, which was quickly decided by the Pennsylvania Supreme Court on April 13, 2020. (No, not that Danny DeVito! The DeVito in this case was a candidate running for local office. Because his campaign office was not an essential or “life-sustaining” organization under Governor Wolf’s order, it had to close down. In addition, a laundry, a golf course, a real estate office, and a private citizen joined the lawsuit on the plaintiffs’ side.)

In this recent case, the five plaintiffs challenged the constitutionality of a statewide executive order shutting down all “non-life-sustaining” business firms in the Commonwealth of Pennsylvania. (But are courts of law “life-sustaining” operations? The entire text of Governor Tom Wolf’s Executive Order is reprinted on pp. 5-7 of the court’s opinion.) The plaintiffs challenged the governor’s order on various constitutional grounds, but for brevity’s sake, I will focus on their takings claims here.

In brief, the Pennsylvania Supreme Court, erroneously in my view, dismissed the plaintiffs’ takings claim because Governor Wolf’s order was a temporary measure. The court reasoned as follows (p. 37):

“The Executive Order results in only a temporary loss of the use of the Petitioners’ business premises, and the Governor’s reason for imposing said restrictions on the use of their property, namely to protect the lives and health of millions of Pennsylvania citizens, undoubtedly constitutes a classic example of the use of the police power ….”

But with all due respect to the learned judges, whether a given taking is temporary or permanent is irrelevant. Why? Because it is not the temporal duration of the taking that matters but rather the magnitude of the economic loss suffered by the property owner. In other words, even a temporary regulatory taking is a “taking” requiring just compensation if the property owner can pass the Penn Central test. (For a scholarly treatment of the law of temporary takings, see this excellent paper by Daniel Siegel and Robert Meltz.)

Admittedly, the Penn Central test is a hard test to pass, but alas, the court in the “Friends of Danny DeVito” case did not even bother to go through or apply the Penn Central factors. Assuming the plaintiffs in this case could have proved a significant decline in revenues after Governor Wolf’s order went into effect, then they would have had a strong takings claim, even though the executive order was only a temporary one. Simply put, the closer to zero their revenues post-lockdown, the stronger their case.

In my view, the plaintiffs in the “Friends of Danny DeVito” case made a strategic error when they brought their lawsuit, like when the great Magnus Carlsen moved his pawn to the h5 square in his second rapid game against Ding Liren last month. The plaintiffs were not really suing for compensation. Instead, they wanted the courts to strike down Governor Wolf’s order altogether. This move was a strategic blunder because there is no legal doubt that state governments have broad “police powers” to protect the health, safety, and morals of their citizens and residents.

What if one of the other plaintiffs, like the laundry or the golf course, had brought their own separate lawsuit, and what if they had only sued for “just compensation” instead of trying to strike down the governor’s order altogether? Would the outcome have been different?

Screen Shot 2020-05-07 at 11.24.02 AM

Move along … nothing to see here!

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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1 Response to Temporary Takings

  1. Pingback: Property rights in a pandemic | prior probability

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