Horne v. Department of Agriculture

HORNE et al. v. DEPARTMENT OF AGRICULTURE

Certiorari to the United States Court of Appeals for the Ninth Circuit.

No. 14-275. Argued April 22, 2015 — Decided June 22, 2015.

750 F. 3d 1128, reversed. Certiorari granted, 574 U. S. 1118 (2015).

Roberts, C. J., delivered the opinion of the Court, in which Scalia, Kennedy, Thomas, and Alito, JJ., joined, and in which Ginsburg, Breyer, and Kagan, JJ., joined as to Parts I and II. Thomas, J., filed a concurring opinion, post, p. 370. Breyer, J., filed an opinion concurring in part and dissenting in part, in which Ginsburg and Kagan, JJ., joined, post, p. 371. Sotomayor, J., filed a dissenting opinion, post, p. 377.

Michael W. McConnell argued the cause for petitioners. With him on the briefs were John C. O'Quinn, Stephen S. Schwartz, and Brian C. Leighton. Deputy Solicitor General Kneedler argued the cause for respondent. With him on the brief were Solicitor General Verrilli, Acting Assistant Attorney General Mizer, Elizabeth B. Prelogar, Michael S. Raab, and Carrie F. Ricci.

The report occupies pages 351 through 389 of volume 576 of the United States Reports. The Reporter's syllabus is printed at pages 351 through 353; the opinion of the Court begins at page 354 and closes at page 370, where the concurring opinion of Justice Thomas also begins; the opinion of Justice Breyer, concurring in part and dissenting in part, begins at page 371, and the dissenting opinion of Justice Sotomayor begins at page 377 and closes the report at page 389.

[576 U.S. 352] “Held: The Fifth Amendment requires that the Government pay just compensation when it takes personal property, just as when it takes real property. Any net proceeds the raisin growers receive from the sale of the reserve raisins goes to the amount of compensation they have received for that taking—it does not mean the raisins have not been appropriated for Government use. Nor can the Government make raisin growers relinquish their property without just compensation as a condition of selling their raisins in interstate commerce. Pp. 357-370.”

[576 U.S. 352] “(a) The Fifth Amendment applies to personal property as well as real property. The Government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home. Pp. 357-362.”

[576 U.S. 352] “(1) This principle, dating back as far as Magna Carta, was codified in the Takings Clause in part because of property appropriations by both sides during the Revolutionary War. This Court has noted that an owner of personal property may expect that new regulation of the use of property could ‘render his property economically worthless.’ Lucas v. South Carolina Coastal Council, 505 U. S. 1003, 1027-1028. But there is still a ‘longstanding distinction’ between regulations concerning the use of property and government acquisition of property. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U. S. 302, 323. When it comes to physical appropriations, people do not expect their property, real or personal, to be actually occupied or taken away. Pp. 357-361.”

[576 U.S. 352] “(2) The reserve requirement imposed by the Raisin Committee is a clear physical taking. Actual raisins are transferred from the growers to the Government. Title to the raisins passes to the Raisin Committee. The Committee disposes of those raisins as it wishes, to promote the purposes of the raisin marketing order. The Government's formal demand that the Hornes turn over a percentage of their raisin crop without charge, for the Government's control and use, is ‘of such a unique character that it is a taking without regard to other factors that a court might ordinarily examine.’ Loretto v. Teleprompter Manhattan CATV Corp., 458 U. S. 419, 432. Pp. 361-362.”

[576 U.S. 352, 353] “(b) The fact that the growers are entitled to the net proceeds of the raisin sales does not mean that there has been no taking at all. When there has been a physical appropriation, ‘we do not ask . . . whether it deprives the owner of all economically valuable use’ of the item taken. Tahoe-Sierra Preservation Council, 535 U. S., at 323. The fact that the growers retain a contingent interest of indeterminate value does not mean there has been no taking, particularly when that interest depends on the discretion of the taker, and may be worthless, as it was for one of the two years at issue here. Andrus v. Allard, 444 U. S. 51, distinguished. Once there is a taking, as in the case of a physical appropriation, any payment from the Government in connection with that action goes, at most, to the question of just compensation. Pp. 362-364.”

[576 U.S. 353] “(c) The taking in this case also cannot be characterized as part of a voluntary exchange for a valuable government benefit. In one of the years at issue, the Government insisted that the Hornes part with 47 percent of their crop for the privilege of selling the rest. But the ability to sell produce in interstate commerce, although certainly subject to reasonable government regulation, is not a ‘benefit’ that the Government may withhold unless growers waive constitutional protections. Ruckelshaus v. Monsanto Co., 467 U. S. 986, and Leonard & Leonard v. Earle, 279 U. S. 392, distinguished. Pp. 364-367.”

[576 U.S. 353] “(d) The Hornes are not required to first pay the fine and then seek compensation under the Tucker Act. See Horne, 569 U. S., at 527-528. . . . There is no need for the Ninth Circuit to calculate the just compensation due on remand. The clear and administrable rule is that ‘just compensation normally is to be measured by “the market value of the property at the time of the taking.”’ United States v. 50 Acres of Land, 469 U. S. 24, 29. Here, the Government already calculated that amount when it fined the Hornes the fair market value of the raisins. Pp. 367-370.”

[576 U.S. 354] “Under the United States Department of Agriculture's California Raisin Marketing Order, a percentage of a grower's crop must be physically set aside in certain years for the account of the Government, free of charge. The Government then sells, allocates, or otherwise disposes of the raisins in ways it determines are best suited to maintaining an orderly market. The question is whether the Takings Clause of the Fifth Amendment bars the Government from im[576 U.S. 355]posing such a demand on the growers without just compensation.”

[576 U.S. 357] “The first question presented asks ‘[w]hether the government's “categorical duty” under the Fifth Amendment to pay just compensation when it “physically takes possession of an interest in property,” Arkansas Game & Fish Comm'n v. United States, [568 U. S. 23, 31] (2012), applies only to real property and not to personal property.’ The answer is no.”

[576 U.S. 357] “There is no dispute that the ‘classic taking [is one] in which the government directly appropriates private property for its own use.’ Tahoe-Sierra Preservation Council, [576 U.S. 358] Inc. v. Tahoe Regional Planning Agency, 535 U. S. 302, 324 (2002) (brackets and internal quotation marks omitted). Nor is there any dispute that, in the case of real property, such an appropriation is a per se taking that requires just compensation. See Loretto v. Teleprompter Manhattan CATV Corp., 458 U. S. 419, 426-435 (1982).”

[576 U.S. 358] “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.”

[576 U.S. 358] “The Takings Clause provides: ‘[N]or shall private property be taken for public use, without just compensation.’ U. S. Const., Amdt. 5. It protects ‘private property’ without any distinction between different types. The principle reflected in the Clause goes back at least 800 years to Magna Carta, which specifically protected agricultural crops from uncompensated takings. Clause 28 of that charter forbade any ‘constable or other bailiff’ from taking ‘corn or other provisions from any one without immediately tendering money therefor, unless he can have postponement thereof by permission of the seller.’ Cl. 28 (1215), in W. McKechnie, Magna Carta, A Commentary on the Great Charter of King John 329 (2d ed. 1914).”

[576 U.S. 358] “The colonists brought the principles of Magna Carta with them to the New World, including that charter's protection against uncompensated takings of personal property.”

[576 U.S. 362] “The second question presented asks ‘[w]hether the government may avoid the categorical duty to pay just compensation for a physical taking of property by reserving to the [576 U.S. 363] property owner a contingent interest in a portion of the value of the property, set at the government's discretion.’ The answer is no.”

[576 U.S. 363] “But when there has been a physical appropriation, ‘we do not ask . . . whether it deprives the owner of all economically valuable use’ of the item taken. Tahoe-Sierra Preservation Council, 535 U. S., at 323; see id., at 322 (‘When the government physically takes possession of an interest in property for some public purpose, it has a categorical duty to compensate the former owner, regardless of whether the interest that is taken constitutes an entire parcel or merely a part thereof.’ (citation omitted)).”

[576 U.S. 363] “The fact that the growers retain a contingent interest of indeterminate value does not mean there has been no physical taking, particularly since the value of the interest depends on the discretion of the taker, and may be worthless, as it was for one of the two years at issue here.”

[576 U.S. 365] “In Loretto, we rejected the argument that the New York law was not a taking because a landlord could avoid the requirement by ceasing to be a landlord. We held instead that ‘a landlord's ability to rent his property may not be conditioned on his forfeiting the right to compensation for a physical occupation.’ 458 U. S., at 439, n. 17. . . . As the Court concluded, property rights ‘cannot be so easily manipulated.’ Ibid.”

[576 U.S. 366] “The taking here cannot reasonably be characterized as part of a similar voluntary exchange. In one of the years at issue here, the Government insisted that the Hornes turn over 47 percent of their raisin crop, in exchange for the ‘benefit’ of being allowed to sell the remaining 53 percent. The next year, the toll was 30 percent. We have already rejected the idea that Monsanto may be extended by regarding basic and familiar uses of property as a ‘Government benefit’ on the same order as a permit to sell hazardous chemicals.”

[576 U.S. 366] “Selling produce in interstate commerce, although certainly subject to reasonable government regulation, is similarly not a special governmental benefit that the Government may hold hostage, to be ransomed by the waiver of constitutional protection. Raisins are not dangerous pesticides; they are a healthy snack. A case about conditioning the sale of hazardous substances on disclosure of health, safety, and environmental information related to those hazards is hardly on point.”

[576 U.S. 367] “Raisins 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,’ id., at 258, 141 A., at 716. Any physical taking of them for public use must be accompanied by just compensation.”

[576 U.S. 367] “But we held in Horne I that the Hornes may, in their capacity as handlers, raise a takings-based defense to the fine levied against them. We specifically rejected the contention that the Hornes were required to pay the fine and then seek compensation under the Tucker Act. See 569 U. S., at 527-528.”

[576 U.S. 368] “The penalty assessed against them as handlers included the dollar equivalent of the raisins they refused to set aside—their raisins. . . . They may challenge the imposition of that fine, and do not have to pay it first and then resort to the Court of Federal Claims.”

[576 U.S. 368] “The best defense may be a good offense, but the Government cites no support for its hypothetical-based approach, or its notion that general regulatory activity such as enforcement of quality standards can constitute just compensation for a specific physical taking.”

[576 U.S. 370] “The Government has already calculated the amount of just compensation in this case, when it fined the Hornes the fair market value of the raisins: $483,843.53. 750 F. 3d, at 1135, n. 6. The Government cannot now disavow that valuation, see Reply Brief 21-23, and does not suggest that the marketing order affords the Hornes compensation in that amount. There is accordingly no need for a remand; the Hornes should simply be relieved of the obligation to pay the fine and associated civil penalty they were assessed when they resisted the Government's effort to take their raisins. This case, in litigation for more than a decade, has gone on long enough.”

[576 U.S. 370] “The judgment of the United States Court of Appeals for the Ninth Circuit is reversed.”

[576 U.S. 370] “It is so ordered.”

[576 U.S. 370] “I join the Court's opinion in full. I write separately to offer an additional observation concerning Justice Breyer's argument that we should remand the case. The Takings Clause prohibits the government from taking private property except ‘for public use,’ even when it offers ‘just compensation.’ U. S. Const., Amdt. 5. That requirement, as originally understood, imposes a meaningful constraint on the power of the state—‘the government may take property only if it actually uses or gives the public a legal right to use the property.’ Kelo v. New London, 545 [U. S. 469, 521 (2005) (Thomas, J., dissenting)].”

[576 U.S. 371] “It is far from clear that the Raisin Administrative Committee's conduct meets that standard. It takes the raisins of citizens and, among other things, gives them away or sells them to exporters, foreign importers, and foreign governments. 7 CFR § 989.67(b) (2015). To the extent that the Committee is not taking the raisins ‘for public use,’ having the Court of Appeals calculate ‘just compensation’ in this case would be a fruitless exercise.”

[576 U.S. 371] “I agree with Parts I and II of the Court's opinion. However, I cannot agree with the Court's rejection, in Part III, of the Government's final argument. The Government contends that we should remand the case for a determination of whether any compensation would have been due if the Hornes had complied with the California Raisin Marketing Order's reserve requirement. In my view, a remand for such a determination is necessary.”

[576 U.S. 371] “The question of just compensation was not presented in the Hornes' petition for certiorari. It was barely touched on in the briefs. And the courts below did not decide it. At the same time, the case law that I have found indicates that the Government may well be right: The marketing order may afford just compensation for the takings of raisins that it imposes. If that is correct, then the reserve requirement does not violate the Takings Clause.”

[576 U.S. 376] “Given the precedents, the parties should provide full briefing on this question. I would remand the case, permit[576 U.S. 377]ting the lower courts to consider argument on the question of just compensation.”

[576 U.S. 377] “For these reasons, while joining Parts I and II of the Court's opinion, I respectfully dissent from Part III.”

[576 U.S. 377] “The Hornes claim, and the Court agrees, that the Raisin Marketing Order, 7 CFR pt. 989 (2015) (hereinafter Order), effects a per se taking under our decision in Loretto v. Teleprompter Manhattan CATV Corp., 458 U. S. 419 (1982). But Loretto sets a high bar for such claims: It requires that each and every property right be destroyed by governmental action before that action can be said to have effected a per se taking. Because the Order does not deprive the Hornes of all of their property rights, it does not effect a per se taking. I respectfully dissent from the Court's contrary holding.”

[576 U.S. 377] “Our Takings Clause jurisprudence has generally eschewed ‘magic formula[s]’ and has ‘recognized few invariable rules.’ Arkansas Game and Fish Comm'n v. United States, 568 U. S. 23, 31 (2012). Most takings cases therefore proceed under the fact-specific balancing test set out in Penn Central Transp. Co. v. New York City, 438 U. S. 104 (1978). . . . The Hornes have not made any argument under Penn Central. In order to prevail, they therefore must fit their claim into one of the three narrow categories in which we have assessed takings claims more categorically.”

Editorial note. This record is a research edition, not a substitute for the official reporter. It reproduces the Reporter of Decisions apparatus and the Court's own text in extended verbatim passages arranged in the Court's own sequence of analysis, each bracketed with the official United States Reports page on which the passage appears. Passages set without quotation marks are Society prose; every quotation mark in this record encloses the Court's or the Reporter's words.

Editorial note. The bound volume prints the report beginning at page 351, and the running heads of the report read ‘Cite as: 576 U. S. 351 (2015).’ The citation of record retained above, 576 U.S. 350, follows the pagination in general circulation before the bound volume was issued. Page references throughout this record follow the bound volume.

Editorial note. The Court-authored sections of this record are SELECTED EXCERPTS, not complete opinions. Each such section is headed accordingly, and no section of this record represents a judicial opinion as reproduced in full.

Editorial note. Three limitations are declared. First, the footnotes of the opinion and of the separate opinions are not reproduced. Second, the concurring opinion of Justice Thomas, the opinion of Justice Breyer concurring in part and dissenting in part at pages 371 through 377, and the dissenting opinion of Justice Sotomayor at pages 377 through 389 appear here only as opening passages, with Justice Breyer's closing passage, together with a Society summary of the disagreement in the sections that follow; they are not reproduced in full. Third, the Court's historical survey of colonial and founding-era protections of personal property at pages 358 through 361, its treatment of Andrus v. Allard and Leonard & Leonard v. Earle, and its discussion of the ‘Bauman and its progeny’ line at pages 368 through 369 are abridged; every omission inside a quotation is marked by ellipsis.

Editorial note. The optical transcription of the digitised bound volume drops the letter i from the fi ligature, so that ‘fined’, ‘filed’, ‘benefit’, and ‘reflected’ appear defectively, and renders some em dashes as hyphens. Such obvious typographic and scanning defects have been silently corrected against the surrounding text; no substantive word has been altered, modernised, or paraphrased inside a quotation.

Editorial note. For any purpose requiring the complete official text, including the footnotes and the separate opinions in full, consult the bound volume through the canonical source recorded with this authority.

Editorial note. A marketing order promulgated under the Agricultural Marketing Agreement Act of 1937 required raisin handlers, in certain years, to reserve a percentage of the crop for the account of the Raisin Administrative Committee, which acquired title and disposed of the reserve in non-competitive markets or by donation, returning any net proceeds to the growers. The petitioners, California raisin growers who also handled their own crop, refused to set aside raisins in the 2002-2003 and 2003-2004 seasons, when the reserve percentages were 47 and 30 percent respectively, and were assessed $483,843.53, the fair market value of the withheld raisins, together with civil penalties.

Editorial note. After an earlier decision in the same litigation held the takings defence properly raised in the enforcement proceeding, Horne v. Department of Agriculture, 569 U. S. 513 (2013), the Ninth Circuit rejected the defence on the merits, 750 F. 3d 1128 (2014), reasoning that personal property receives lesser protection and that any taking was conditioned on the voluntary choice to sell raisins in interstate commerce. The Supreme Court granted certiorari, 574 U. S. 1118 (2015), and reversed.

Editorial note. Three issues were decided. The Fifth Amendment draws no distinction between real and personal property for purposes of the categorical physical-takings rule. The reserve requirement was a physical taking, because actual raisins were transferred out of the growers' possession and title vested in the committee, extinguishing the rights to possess, use, and dispose of them. And neither the possibility of a return from the reserve pool nor the growers' choice to participate in the raisin market converted the appropriation into a permissible condition; the contingent net proceeds go to the amount of just compensation, not to whether a taking occurred. The rule that follows is that a governmental appropriation of identified personal property is a per se taking, and the compensation owed is the fair market value of what was taken.

Editorial note. The Chief Justice traced the protection of personal property to the Magna Carta tradition and to the colonial grievance against uncompensated seizures of goods, and reasoned that Loretto's categorical rule turns on the character of the invasion rather than the classification of the thing invaded. Selling raisins in interstate commerce is not a government benefit that may be conditioned on the surrender of property, unlike the voluntary submission of data for the advantage of registration in Ruckelshaus v. Monsanto Co.; the growers' only alternative was to abandon a lawful use of their crop. The Court further held that no remand for calculation was needed, the Government having already assessed the raisins' fair market value.

Editorial note. Justice Thomas, concurring, added that the Committee's disposition of the raisins may not be a taking 'for public use' at all, which would make any compensation calculation fruitless. Justice Breyer, joined by Justices Ginsburg and Kagan, agreed that a taking had occurred but would have remanded to determine whether the marketing order itself affords just compensation, a question neither presented nor decided below. Justice Sotomayor, dissenting, read Loretto as requiring the destruction of every property right before a per se taking arises, and reasoned that the growers' retained interest in the net proceeds defeated the categorical claim, leaving the Penn Central balancing test as the only available route — a route the growers had not pursued.

Editorial note. Horne carries the physical-takings analysis beyond land and so completes the treatise's account of what property the Takings Clause protects. It also disciplines the voluntary-participation argument, confining Monsanto's expectations reasoning to regulatory measures that fall short of appropriation, and it distinguishes appropriation of the thing itself from regulation of its price or sale.

Editorial note. Followed and applied. Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021), relied on Horne in holding that an appropriation of a right of access is a per se taking and in rejecting the argument that participation in a regulated industry licenses appropriation.

Editorial note. Read with U.S. Const. amend. V (Takings Clause) and the treatise chapter on physical takings.