The Kelo Case Provides a Strong Legal Argument for Takings Clause Lockdown Compensation

The government must compensate property owners for violating their rights for the public’s benefit

By F. E. Guerra-Pujol

In a previous essay, I explained why businesses and individuals impacted by the coronavirus lockdown orders should receive compensation from the government under the takings clause of the Fifth Amendment to the US Constitution. But do the limits on government power set forth in the Constitution really apply during a national emergency, as I argue? Or, in the immortal words of President Abraham Lincoln regarding the suspension of habeas corpus during the Civil War, “Are all the laws but one to go unexecuted and the government itself go to pieces lest that one be violated?”

Some legal scholars follow Lincoln’s logic in approaching the legality of lockdown orders. Recently, for example, my colleague and friend Ilya Somin, a law professor at George Mason University, has argued that the takings clause does not apply to coronavirus shutdowns. He cites several legal precedents, among them Miller v. Schoene and Penn Central Transportation Co. v. New York City, to support the view that the takings clause is an inappropriate remedy to the shutdown dilemma. More pointedly, and less jurisprudentially, Somin points out that “no judge will want to be seen as impeding an effort to save large numbers of lives in the midst of a grave menace to public health.”

From the start, however, there is a handy and well-known precedent that supports lockdown compensation under the takings clause. Consider the leading Supreme Court case on the takings clause, Kelo v. City of New London. In this 2005 ruling, the Supreme Court held that the city of New London, Connecticut, could acquire 15 residential properties without the owners’ consent in order to transfer them to a private developer. However, the city had to compensate the owners for the value of the taken property.

How did the Supreme Court reach such an egregious result in that case? By taking a very broad and expansive interpretation of the “public use” requirement of the takings clause. In the Kelo Court’s words, “When this Court began applying the Fifth Amendment to the States at the close of the 19th century, it embraced the broader and more natural interpretation of public use as ‘public purpose.’. . . Without exception, our cases have defined that concept broadly, reflecting our longstanding policy of deference to legislative judgments in this field.”

Although many conservative jurists, including Somin himself, have criticized this controversial Supreme Court decision for giving the government too much leeway, Kelo can be turned on its head to support the argument that the takings clause, including its requirement of just compensation, applies to coronavirus lockdowns. After all, the sole rationale of these lockdown orders is to promote public health. Accordingly, if “public use” under the takings clause means any legitimate public purpose, per Kelo, then what greater “public purpose” is there than public health?

Setting aside Kelo, Somin has made three strong arguments for why just compensation for lockdowns is not required as a matter of law, so let’s discuss these in turn. First, he points out that the Supreme Court has carved out a police power exception to the takings clause. According to this line of cases, culminating in Miller vs. Schoene, the exercise of a state’s police power—the power to protect the health, safety, and welfare of its residents—is immune from the takings clause.

Although it is generally true that the state has some legal leeway to protect the welfare of its citizens, Miller vs. Schoene was decided almost 100 years ago, during a bygone era in which the police power was more sparingly used. This authority has since been winnowed down by the 2012 case of Arkansas Game & Fish Commission v. United States, in which a unanimous Supreme Court narrowed this police power exception. As a result, not all exercises of the police power are exempt from the requirements of the takings clause under existing case law.

Somin also invokes Penn Central Transportation Co. v. New York City. In that case, the Supreme Court set forth an indeterminate three-part test that lower courts must follow to determine whether a challenged government action constitutes a “taking” under the Constitution. Broadly speaking, a government action is a taking if (1) the economic impact of the action is sufficiently severe; (2) the owner suffers a great loss of “investment-backed expectations” when the government acts; and (3) the “character” of the government action physically occupies or damages the property.

A reasonable judge could apply the Penn Central test to coronavirus shutdowns and find they indeed constitute a taking. The economic impact of a shelter-in-place order is, by definition, extremely severe if you happen to be a “nonessential” business and must close your doors in order to comply with the order. Furthermore, given their sudden and unprecedented nature, one could also argue that such suppression orders defeat (to the say the least) the investment expectations of most nonessential firms subject to the order. Lastly, and perhaps most importantly, the “character” of these lockdown orders implicates the use of physical force and coercion, since these orders are enforced by the police, who may physically prevent nonessential firms from exercising their property rights and depriving them of their liberty interests as well.

Somin’s concluding argument is not a legal one at all, but it might be his most convincing. According to Somin, “No judge will want to be seen as impeding an effort to save large numbers of lives in the midst of a grave menace to public health.” This legal realist argument can be summed up in four words, as a former law student of mine once put it: “The house [i.e., the government] always wins.”

For a variety of reasons, fighting the government is always going to be an uphill battle, whether it be attempted by a convicted felon appealing his sentence or a property owner challenging a regulation as a taking. The odds of winning are even smaller during a great crisis such as the current pandemic. Courts have rarely stood in the way of the government during times of emergencies, whether it be against the surveillance state post-9/11 or the internment of Japanese-Americans during WWII.

But Somin’s legal realist argument can cut both ways. After all, President Trump has appointed a record number of federal judges during his first few years in office. In fact, almost one-third of all federal judges are now conservative Trump appointees.

Given the expansive interpretation of public use in the Kelo case, the severity of current lockdown orders under the Penn Central test, and a conservative federal judiciary, the argument that the takings clause should apply to COVID-19 lockdown orders may find a receptive audience in today’s federal courts.