To lay the groundwork for the dispute in Cedar Point, in 1975, the State of California enacted a law that created the Agricultural Labor Relations Board (ALRB). The law provides agricultural employees a codified right to self-organization and makes it an unfair labor practice for employers to interfere with the exercise of that right. See Cal. Labor Code §§1152, 1153(a). Thereafter, the ALRB promulgated a regulation allowing union organizers access to agricultural employees at employer worksites “for the purpose of meeting and talking with employees and soliciting their support.” See 8 Cal. Code Regs. §20900(e)(1). The regulation permits a union to “take access” to an employer’s property for up to four 30-day periods in one calendar year. See 8 Cal. Code Regs. §§20900(e)(1)(A)–(B). Notably, the regulation also states that union organizers may not engage in disruptive conduct but are nonetheless free to meet and talk with employees. See 8 Cal. Code Regs. §§20900(e)(3)(A), (4)(C).
Cedar Point Nursery is a strawberry farm in northern California. It employs over 400 seasonal workers and around 100 full-time workers, none of whom live on the property. In October 2015, at five o’clock one morning, members of the United Farm Workers union (UFW) entered Cedar Point’s property without prior notice, as required by the access regulation. The organizers moved to the nursery’s trim shed, where hundreds of workers were preparing strawberry plants. Calling through bullhorns, the organizers disturbed operations, causing some workers to join the organizers in a protest and others to leave the work site altogether. Cedar Point filed a charge against the union for taking access without giving notice. The union responded with a charge of its own, alleging that Cedar Point had committed an unfair labor practice. Fearing that the Union would re-enter the property, Cedar Point and other growers filed for injunctive relief in the U.S. District Court. They were denied relief in both the district court and on appeal to the Ninth Circuit Court of Appeals. The Supreme Court took the case and sought to decide “whether the access regulation constitutes a per se physical taking under the Fifth and Fourteenth Amendments.”
Writing for the Court, Chief Justice Roberts stated that the California regulation granting labor organizations a “right to take access” to an agricultural employer’s property to solicit support for unionization constitutes a per se physical taking. (Emphasis added). The regulation does not merely restrict the growers’ use of their own property. Rather, it appropriates the owners’ right to exclude third parties from their land, “one of the most treasured rights” of property ownership. By granting access to third-party union organizers, even for a limited time, the regulation confers a right to physically invade the growers’ property and, thus, constitutes a per se physical taking. This decision and rationale could represent a watershed moment in takings jurisprudence.
Implications of Cedar Point
The general impression of Cedar Point is that it attempts to discern the boundary between the Supreme Court’s cases that involve regulatory actions deemed as per se takings, and cases that involve regulatory actions examined through the lens of Penn Central.
At the outset, the Takings Clause of the Fifth Amendment, applicable to the States through the Fourteenth Amendment, tersely provides: “[N]or shall private property be taken for public use, without just compensation.” U.S. Const. amend. V. When the government physically acquires private property for a public use, the Takings Clause imposes a clear and categorical obligation to provide the owner with just compensation. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U. S. 302, 321 (2002). These sorts of physical appropriations constitute takings in the most traditional sense, and the Court has assessed them using a per se rule: The government must pay just compensation for what it takes. Id. at 322.
When the government imposes a regulation that restricts a property owner’s ability to use his or her property, the Court has applied a very different analysis. The Court’s regulatory cases date back to the 1920s, where the Court set forth the proposition that, “while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.” Pennsylvania Coal Co. v. Mahon, 260 U. S. 393 (1922). To determine whether a use restriction effects a taking, the Court has generally applied the flexible test developed in Penn Central. First, the test examines the character of the government action and focuses on the impact on the owner’s property rights. Second, the Court looks to the whether the property owner had investment back expectations. Third, the Court assesses the economic impact of the regulation. Penn Central Transportation Co. v. New York City, 438 U.S. 104, 124 (1978).
In Cedar Point, Chief Justice Roberts noted that “government action that physically appropriates property is no less a physical taking because it arises from a regulation.” Cedar Point Nursery v. Hassid, 592 U.S. ___, slip op. at 6 (2021). Moreover, the Chief Justice stated, “the essential question is not…whether the government action at issue comes garbed as a regulation (or statute., or ordinance, or miscellaneous decree). It is whether the government has physically taken property for itself or someone else—by whatever means—or has instead restricted a property owner’s ability to use his own property.” Id., slip op. at 6-7.
The Court grounded its decision in the notion that “the right to exclude” is one of the most treasured rights of property ownership. Loretto v. Teleprompter Manhattan CATV Corp., 458 U. S. 419, 435 (1982). In Loretto, New York adopted a law requiring landlords to allow cable companies to install equipment on their properties. Id. at 423. The property owners alleged that the installation of a ½-inch diameter cable and two 1½-cubic-foot boxes on her roof caused a taking. Id. at 424. The Loretto Court agreed, holding that a permanent physical occupation constitutes a per se taking regardless of whether it results in only a trivial economic loss. Id. at 435.
In sum, Cedar Point attempted to draw a hard line between cases where government has physically taken property for itself or someone else, and cases where the government has restricted a property owner’s ability to use his own property. In the latter set of cases, property owners still face a high bar in attempting to demonstrate a regulatory taking under Penn Central. However, if the claim is framed in a manner that implicates the “right to exclude” due to a physical appropriation of property, property rights practitioners should be cautiously optimistic in vetting a prospective claim.
Potential Challenges under Cedar Point
While Cedar Point can be classified as a “win” for property rights advocates, the decision has the potential to muddy the waters surrounding “large numbers of ordinary regulations in a host of different fields that, for a variety of purposes, permit temporary entry onto (or an “invasion of”) a property owner’s land.” Cedar Point Nursery v. Hassid, 592 U.S. ___ (2021) (Breyer, J., dissenting at 12). Chief Justice Roberts attempted to alleviate this concern by stating that “many government-authorized physical invasions will not amount to takings because they are consistent with longstanding background restrictions on property rights,” Id., slip op. at 18 (citing Lucas v. South Carolina Coastal Council, 505 U. S. 1003, 1028–1029). Regardless, below are two anecdotal examples that should be on the bar’s collective radar for the near future.
First, Cedar Point may permit property owners to assert claims for compensation resulting from a condemning authority’s pre-condemnation inspection. Pursuant to some statutory or regulatory procedures, condemning authorities around the United States and their representatives are routinely authorized to enter private properties to conduct pre-condemnation due diligence investigation. The entry can consist of visual inspections by real estate appraisers and surveyors, but they may also include more physically invasive testing. These inspections assist agencies in determining whether future projects are viable and to estimate property acquisition costs.
For instance, the New Jersey statute which applies to a “preliminary entry” prior to condemnation allows a potential condemnor to “enter upon property to make photographs, studies, surveys, examinations, tests, soundings, borings, samplings or appraisals or to engage in similar activities reasonably related to acquisition….” N.J.S.A. 20:3-16. This statute does not provide for damages resulting from the entry itself, but the agency in New Jersey must, however, restore the property to its original condition, if eminent domain is not used to acquire the property within two years of entry or, otherwise, the agency is required to pay damages to the property owner. Since the government action (i.e., the statue or rule authorizing the pre-condemnation inspection) limits a property owner’s “right to exclude” the government or a third party from entering his or her property, we may notice an influx of cases citing to Cedar Point and requesting compensation for pre-condemnation due diligence inspections. In other states, pre-condemnation entry for inspections and testing purposes already entitles a property owner to just compensation for “actual damage” to the property and for “substantial interference with the [property owner's] possession or use of the property.” See e.g., Property Reserve, Inc. v. Superior Court (Department of Water Resources), 1 Cal.5th 151 (Cal. 2016).
Second, Cedar Point may open the door for possible claims for compensation due to the COVID-19 federal eviction moratoria. In fact, as of late July 2021, the National Apartment Association filed a complaint in the U.S. Court of Federal Claims alleging that rental housing providers have suffered “severe economic losses” because of the freeze on evictions. See NAA et al. v. The United States of America, Complaint (https://www.naahq.org/sites/default/files/7-27-21_filed_complaint.pdf). The complaint asserts that the Centers for Disease Control and Prevention (CDC) curbed several rights under the U.S. Constitution, one of which being the right to compensation when property is taken by government action.
Although the National Apartment Association case is still pending (amended complaint filed in October 2021), it is difficult to ignore Cedar Point when considering the implications of these moratoria. Like the eviction moratoria, Cedar Point involved a regulation that restricted a property owner’s right to exclude third parties from their property. In comparison, the eviction moratoria are regulations that restrict a landlord’s ability to remove defaulting tenants from their buildings during the pandemic. In plainer terms, Cedar Point found that a regulation that allows third parties to enter private property can constitute a compensable physical taking, while the moratoria are similar regulations that allow third parties to remain on private property and restrict the owner’s right to exclude. Therefore, a broad interpretation of Cedar Point seems to support the conclusion that the moratoria may result in compensable takings and property rights practitioners should be mindful of the possibility that these claims may be presented. As time progresses post-Cedar Point, litigation around the country may start to produce results that should be carefully monitored.
Finally, the import of Cedar Point should also be viewed as a possible chink in the armor of the Supreme Court’s holding in Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U. S. 302, 321 (2002). There, the Court held that a “temporary” moratorium (lasting 32 months) on all development around Lake Tahoe did not constitute a compensable taking because it did not “go too far” in duration, even though the majority commented that any moratorium of more than a year should be viewed “with special skepticism.” Id. at 341-343. Tahoe-Sierra created, or reinforced, the heavy legal burden upon takings claimants which makes it seem unlikely that any “temporary” restriction will lead to a successful claim. But, in light of the fact that Cedar Point involved a regulation which “took” physical access onto private property for only 30-day periods (up to four per year), should future claims be viewed through a more favorable lens? For instance, if a regulation that allows temporary access onto property is a compensable physical taking, then why isn’t a regulation that temporarily prohibits access to private property, or prohibits removal of people or physical things from private property, also compensable?
Conclusion
It is still too early to forecast the scope, windfall, and consequences of the Cedar Point decision. Regardless of any personal views that one may have or espouse, practitioners should heed the warning that the Supreme Court has given in Cedar Point about a possible shift in the landscape of future regulation-based takings claims.
