The demise of federal takings litigation.

• Author: Sterk, Stewart E.

ABSTRACT

For more than twenty years the Supreme Court has held that a federal takings claim is not ripe until the claimant seeks compensation in state court. The Court's recent opinion in San Remo Hotel, L.P.v. City & County of San Francisco establishes that the federal full faith and credit statute applies to federal takings claims. The Court itself recognized that its decision limits the availability of a federal forum for takings claims. In fact, however, claim preclusion doctrine--not considered or discussed by the Court--may result in more stringent limits on federal court review of takings claims than the Court's opinion anticipates. The counterintuitive result--that federal takings claims must be litigated in state court--plays a critical role in the Supreme Court's emerging takings jurisprudence, which largely delegates to state courts the primary responsibility for policing land use regulation.

TABLE OF CONTENTS INTRODUCTION I. TAKINGS CHALLENGES IN FEDERAL COURT: THE LEGAL LANDSCAPE A. Williamson County B. England Reservations C. San Remo II. WHAT IS LEFT OF FEDERAL TAKINGS JURISDICTION? A. Facial Challenges 1. The Demise of the "'Substantially Advances" Challenge 2. Takings Challenges Based on Per Se Rules B. "As Applied" Challenges 1. The Impact of State Preclusion Law 2. Takings Claims and Issue Preclusion 3. Takings Claims and Claim Preclusion III. RETHINKING WILLIAMSON COUNTY A. The Court's Justification and the Rehnquist Critique.. B. The Structure of the Supreme Court's Takings Jurisprudence C. Takings Federalism and the Williamson County Ripeness Requirement 1. Potential for Intrusion on State Prerogatives 2. Uniformity 3. Comparison with Diversity Cases 4. The Scope of the Ripeness Doctrine CONCLUSION INTRODUCTION

Although the Supreme Court decided three takings cases in 2005, public attention focused almost exclusively on one, Kelo v. City of New London, (1) in which the Court sustained the city's use of its eminent domain power to take private land to stimulate economic development. The second of the three cases, Lingle v. Chevron U.S.A., Inc., (2) repudiated doctrinal statements that a takings claim would lie when a landowner established that a regulation "does not substantially advance legitimate state interests"--statements that had never formed the basis of a Supreme Court holding. (3) From the perspective of land use lawyers, the third case--San Remo Hotel, L.P. v. City & County of San Francisco--is in many ways the most significant, because its combination of ripeness and preclusion doctrines appears to bar the door to federal court for virtually all federal takings claims. (4)

In Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, the Supreme Court held that because the Takings Clause (5) does not bar the states from taking property, but instead prohibits the states from taking property without just compensation, a federal takings claim is not ripe until the aggrieved landowner has unsuccessfully sought just compensation through available state procedures. (6) Williamson County's ripeness requirement, then, requires a landowner to proceed--at least initially--in state court.

In San Remo, however, the Court held that the full faith and credit statute (7) applies to state adjudications necessary to "ripen" a landowner's federal takings claim. (8) The Court emphasized that the statute includes no exception that guarantees a federal forum to takings claimants who have been denied compensation in state court. (9) The Court therefore affirmed a Ninth Circuit decision holding that California issue preclusion doctrine barred a landowner from bringing a federal takings claim in federal court after the dispositive issues had been resolved in a state court proceeding. (10) As a result of San Rerno, a state court denial of compensation can act simultaneously to ripen, and to bar, any federal court takings claim. Although the San Remo decision was unanimous, the decision's implications left four concurring Justices discomfited by the principle that "federal takings claims in particular should be singled out to be confined to state court." (11) Because these Justices fully endorsed--and contributed to the development of--the preclusion principles that led to the San Remo result, they called for reconsideration of the Williamson County ripeness doctrine. (12)

Closer analysis reveals, however, that applying the full faith and credit statute's preclusion principles to takings claims is more complex than the Court's opinion suggests. The issues resolved by a state court in the course of denying compensation to a landowner will sometimes be different from the issues to be resolved in a federal takings claim. As a result, issue preclusion doctrine, relied on explicitly by the Ninth Circuit in San Remo and implicitly by the Supreme Court, would leave many federal takings claims open to federal litigation even after the state courts have finally rejected state takings claims. But the gaps left open by issue preclusion doctrine will quickly be closed by claim preclusion principles--not relied on by the city and not discussed by the Court. The result will be a nearly complete bar on duplicative federal litigation of takings claims.

That result leads to an evaluation of the plea by the concurring Justices for reconsideration of Williamson County's ripeness requirement. That requirement has provoked consternation in two separate legal communities. Land use lawyers, particularly those who represent landowner interests, regard the decision as an unwarranted obstacle to vindication of their clients' constitutional rights. (13) Federal courts scholars treat Williamson County as a puzzling exception to the ordinary principles governing federal jurisdiction. (14) Especially in light of San Remo, then, Williamson County is indeed "ripe" for reconsideration.

Reconsideration of the ripeness requirement, however, reveals that it is not merely a barren formality, but instead an essential pillar of the Court's emerging and unarticulated takings jurisprudence, which recognizes the primacy of background state law in takings doctrine, and delegates to state courts the primary responsibility for developing and enforcing limits on takings by state and local governments. (15)

1. TAKINGS CHALLENGES IN FEDERAL COURT: THE LEGAL LANDSCAPE

   The Federal Constitution's Fifth Amendment prohibits takings without just compensation. (16) Section 1983 of the United States Code imposes liability on persons--including, by judicial construction, municipalities and other state agencies--who, acting under color of state law, deprive others of rights secured by the Constitution and federal laws. (17) Taken together, these provisions make clear that a municipality's alleged taking of private property raises a federal question, which confers jurisdiction on the federal courts. (18)

   The Supreme Court, however, has significantly limited landowner access to the federal courts in takings cases. First, in Williamson County, the Court developed a "ripeness" doctrine that prevented most landowner-plaintiffs from proceeding to federal court without first objecting to municipal action in state court. (19) In response to Williamson County, a number of landowners invoked an obscure procedure first developed in England v. Louisiana State Board of Medical Examiners (20) to preserve their right to litigate federal takings claims in federal court. Although that procedure persuaded a number of federal courts, including the Second Circuit, (21) the Supreme Court all but barred the door on "England reservations" in its recent San Remo opinion. (22)

   1. Williamson County

      In the Williamson County case, the Court held that a Tennessee landowner's federal takings claim is unripe until the landowner has unsuccessfully sought just compensation through the procedures made available by the state. (23) Williamson County involved a landowner's claim in federal district court for money damages suffered when the planning commission allegedly took the land owner's property in the course of applying local land use regulations to the landowner's land. (24) The Sixth Circuit upheld a jury award of money damages to the landowner, (25) and the Supreme Court granted certiorari to consider whether governments must pay money damages to landowners who have suffered a temporary taking. (26)

      The Court never reached the damages issue. Instead, in an opinion by Justice Blackmun, the Court held the landowner's claim unripe on two separate grounds. First, the Court held that a takings claim "is not ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue." (27) Because the landowner had not sought variances that might have been available under state law, it could not conclusively demonstrate that the commission would deny it all reasonable beneficial use of its property, and could not, therefore, sustain a takings claim. (28) This requirement that the landowner seek and obtain a "final decision" before pursuing a takings claim applies equally whether it proceeds in state or federal court. (29)

      But the Court also advanced a second ground for its conclusion that the claim was unripe: the landowner had not availed itself of Tennessee's procedures for obtaining just compensation. Tennessee authorized landowners to bring "inverse condemnation" actions to obtain just compensation for alleged takings affected by restrictive zoning laws or development restrictions. (30) The Court held that the landowner "cannot claim a violation of the Just Compensation Clause until it has used the procedure and been denied just compensation." (31) This second prong of the Court's ripeness requirement meant that, subject to limited exceptions, (32) the landowner could not prevail on a takings claim in federal court until it had failed in its effort to obtain...