Saturday, June 15, 2013

Eminent Domain on the Crops of California Raisin Growers?

The takings clause of the Fifth Amendment does not only apply to the government’s use of eminent domain to take real estate.  This was emphasized by the United States Supreme Court in last week’s opinion entitled Horne v. Department of Agriculture, 569 U.S. ___ (2013).

Horne is about a California raisin grower based in the counties of Fresno and Madera, who challenged a federal regulatory scheme which has been applied to California raisin growers since 1949.  The regulations, “adopted to stabilize prices by limiting the supply of raisins on the market”, require raisin growers to frequently turn over a percentage of their crop to the Federal Government. 
The government took action against the grower for failing to participate in and comply with the regulatory scheme.  The government assessed significant fines and civil penalties against the grower.  As a defense, the raisin grower argued that the statutory scheme, known as the Agricultural Marketing Agreement Act of 1937 and the California Raisin Marketing Order, violated the Fifth Amendment as an unconstitutional taking of their private property without just compensation.  The grower’s argument was that “it would be unconstitutional for the Government to come on their land and confiscate raisins, or to confiscate the proceeds of raisin sales, without paying just compensation.” 

The grower first went through an administrative hearing process where the first administrative law judge rejected the takings defense, and the appellate administrative officer declined to deal with that constitutional defense.  The raisin grower then filed a lawsuit in Federal District Court, where they lost a motion for summary judgment filed by the government.  The District Court held that there was no physical taking of the crop.  The Ninth Circuit Court of Appeals affirmed, but held that it lacked jurisdiction to hear the grower’s Fifth Amendment takings defense. The Supreme Court of the United States agreed to hear the case in order to decide the jurisdiction issue.
The government argued that the raisin grower’s claim was premature, because it should have first pursued its takings claim in the Court of Federal Claims, under the Tucker Act.  The Supreme Court disagreed, explaining that under the statutory scheme at issue, Tucker Act jurisdiction was withdrawn.  In fact, the regulatory scheme specifically gives the Federal District Court jurisdiction to review administrative rulings.  Therefore, the raisin grower’s Federal District Court claim was not premature.  The Supreme Court further held that a “takings-based defense” can be raised by the raisin grower in connection with the government’s action to enforce the regulatory scheme. 
The Supreme Court unanimously ruled that the raisin grower “raised a cognizable takings defense”, and that the Ninth Circuit Court of Appeals made a mistake when it declined to resolve that defense.  The ruling of the Ninth Circuit was reversed, and the case was remanded back to the Court of Appeals for further proceedings, where a determination will have to be made as to whether the government’s imposition of fines and penalties on the raisin grower violated the Fifth Amendment to the Constitution. 

It will be interesting to see what the Ninth Circuit Court of Appeals does with this case on remand.  Will the Court of Appeals put a stop to the confiscation of the crops or proceeds of the crops of California raisin farmers that has been happening since 1949?   Will this case eventually wind up back with the Supreme Court?